IDEAS home Printed from https://ideas.repec.org/a/tpe/jtecpo/v42y2008i3p463-493.html
   My bibliography  Save this article

Private Roads: Auctions and Competition in Networks

Author

Listed:
  • Erik T. Verhoef

Abstract

This paper studies the efficiency impacts of private toll roads in initially untolled networks. The analysis allows for capacity and toll choice by private operators, and endogenises entry and therewith the degree of competition, distinguishing and allowing for both parallel and serial competition. Two institutional arrangements are considered, namely one in which entry is free and one in which it is allowed only after winning an auction in which patronage is to be maximised. Both regimes have the second-best zero-profit equilibrium as the end-state of the equilibrium sequence of investments; but the auctions regime approaches this end-state more rapidly: tolls are set equal to their second-best zero-profit levels immediately, and capacity additions for the earlier investments are bigger. When discreteness of capacity is relevant and limits the number of investments that can be accommodated practically, the auctions regime may therefore still result in a more efficient end-state, with a higher social surplus, although the theoretical end-state is the same as under free entry. © 2008 LSE and the University of Bath

Suggested Citation

  • Erik T. Verhoef, 2008. "Private Roads: Auctions and Competition in Networks," Journal of Transport Economics and Policy, University of Bath, vol. 42(3), pages 463-493, September.
  • Handle: RePEc:tpe:jtecpo:v:42:y:2008:i:3:p:463-493
    as

    Download full text from publisher

    File URL: http://www.catchword.com/cgi-bin/cgi?ini=bc&body=linker&reqidx=0022-5258(20080901)42:3L.463;1-
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. van den Berg, Vincent A.C. & Rouwendal, Jan, 2016. "Tender auctions with existing operators bidding," Economics of Transportation, Elsevier, vol. 6(C), pages 1-10.
    2. Vincent A.C. van den Berg & Erik T. Verhoef, 2011. "Is the Service Quality of Private Roads too Low, too High, or just Right when Firms compete Stackelberg in Capacity?," Tinbergen Institute Discussion Papers 11-079/3, Tinbergen Institute, revised 02 Aug 2012.
    3. van den Berg, Vincent A.C. & Verhoef, Erik T., 2012. "Is the travel time of private roads too short, too long, or just right?," Transportation Research Part B: Methodological, Elsevier, vol. 46(8), pages 971-983.
    4. Vincent Van Den Berg, 2011. "The effect of private road supply on the volume/capacity ratio when firms compete Stackelberg in Road Capacity," ERSA conference papers ersa11p1203, European Regional Science Association.
    5. Xinying Fu & Vincent A.C. van den Berg & Erik T. Verhoef, 2017. "Private Road Supply in Networks with Heterogeneous Users," Tinbergen Institute Discussion Papers 17-025/VIII, Tinbergen Institute, revised 12 Dec 2017.
    6. Xinying Fu & Vincent van den Berg & Erik T. Verhoef, 2015. "Private Road Networks with Uncertain Demand," Tinbergen Institute Discussion Papers 15-092/VIII, Tinbergen Institute, revised 28 Nov 2017.
    7. van der Weijde, Adriaan Hendrik & Verhoef, Erik T. & van den Berg, Vincent A.C., 2013. "Competition in multi-modal transport networks: A dynamic approach," Transportation Research Part B: Methodological, Elsevier, vol. 53(C), pages 31-44.
    8. van den Berg, Vincent A.C., 2013. "Serial private infrastructures," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 186-202.
    9. Achim I. Czerny & Kay Mitusch & Andreas Tanner, 2010. "Priority Rules Versus Scarcity Premiums in Rail Markets," WHU Working Paper Series - Economics Group 10-03, WHU - Otto Beisheim School of Management.
    10. De Borger, Bruno & Proost, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Economics of Transportation, Elsevier, vol. 1(1), pages 35-48.
    11. van den Berg, Vincent A.C., 2012. "Auctions for private congestible infrastructures," MPRA Paper 40103, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpe:jtecpo:v:42:y:2008:i:3:p:463-493. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: http://www.bath.ac.uk/e-journals/jtep .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.