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Competing Transport Networks

Author

Listed:
  • Marco J. van der Leij

    (Faculty of Economics, Erasmus University Rotterdam)

Abstract

In a circular city model, I consider network design and pricing decisions for asingle fast transport connection that faces competition from a slower but betteraccessible transport mode. To access the fast transport network individuals haveto make complementary trips by slow mode. This fact has interesting implicationson the location decisions. I show that in the presence of competition the profit-maximizingand socially optimal decision would be to cluster the two stations. Bycontrast, in the absence of competition both a profit-maximizing firm and a socialplanner would locate the two stations on opposite sides of the circle.

Suggested Citation

  • Marco J. van der Leij, 2003. "Competing Transport Networks," Tinbergen Institute Discussion Papers 03-009/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20030009
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    File URL: https://papers.tinbergen.nl/03009.pdf
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    References listed on IDEAS

    as
    1. Severin Borenstein, 1989. "Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 344-365, Autumn.
    2. C. D. Hyson & W. P. Hyson, 1950. "The Economic Law of Market Areas," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 64(2), pages 319-327.
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    Cited by:

    1. Britta Hoyer & Kris De Jaegher, 2016. "Strategic Network Disruption and Defense," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(5), pages 802-830, October.

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    More about this item

    Keywords

    Networks; Transportation; Competition; Market area; Circular city.;
    All these keywords.

    JEL classification:

    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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