Competition in Transportation Modes and the Provision of Infrastructure Services
The purpose of this paper is to model competition in freight transport and to work out the role of the government in providing infrastructure for the competitors. Freight transport could in principle be provided by the firm itself by using firm-owned trucks or transportation services could be outsourced by purchasing these services from rail and/or truck transport firms. We link production in the rest of the economy to transport demand, provided by two competing modes of transport. Since congestion is an increasing cost component in densely populated countries, we develop an index of congestion which can be controlled by investing in highway infrastructure. Given infrastructure, a fuel tax and the stock of vehicles, we first derive the conditional demand functions of the economy for truck and rail services. The two transport firms know these demand functions and compete in prices. We then propose a transportation policy which chooses two types of infrastructure, highways and the railway system, and a fuel tax in order to maximize welfare. The economic aspects for an optimal provision of the two types of infrastructure can be expressed by a set of unknown elasticities which measure the impact of infrastructure services on price and quantity variables in transport industries. With time series data for the German economy we measure these impacts on prices in the rail and truck industries, on the volume of transport, on congestion, and on the utilization of the stock of transportation equipment.
|Date of creation:||1999|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.vwl.uni-mannheim.de/institut/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Braeutigam, Ronald R, 1979. "Optimal Pricing with Intermodal Competition," American Economic Review, American Economic Association, vol. 69(1), pages 38-49, March.
When requesting a correction, please mention this item's handle: RePEc:mnh:vpaper:1046. 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: (Katharina Rautenberg)
If references are entirely missing, you can add them using this form.