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A Monopolistic Market for Advanced Traveller Information Systems and Road Use Efficiency

Author

Listed:
  • Rong Zhang

    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

  • Erik T. Verhoef

    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

Abstract

This study presents a model for exploring the interactions between a transport market and a monopolistic market for advanced traveller information systems (ATIS). We examine the properties of the information market, and in particular, the relationship between monopoly information pricing and road system efficiency. From model experiments, we find that increasing information penetration will lead to negative external effects for the already informed drivers. Furthermore, monopoly information pricing is not the most attractive option from a system efficiency viewpoint, because of the relatively high price charged by the monopolist. Third, a user or a producer subsidy on the information market can help realise a second-best optimum of road use. Finally, relatively low uncertainty on the road and high information costs limit the monopolist’s profit on the information market, as well as relative system efficiency. While relatively inelastic demand for mobility negatively affects the monopolist’s profit, the relative social benefits from private information peak at intermediate demand elasticities.

Suggested Citation

  • Rong Zhang & Erik T. Verhoef, 2004. "A Monopolistic Market for Advanced Traveller Information Systems and Road Use Efficiency," Tinbergen Institute Discussion Papers 04-014/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20040014
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    Cited by:

    1. Yu, Xiaojuan & van den Berg, Vincent A.C. & Li, Zhi-Chun, 2023. "Congestion pricing and information provision under uncertainty: Responsive versus habitual pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).
    2. André De Palma & Nathalie Picard, 2005. "Congestion on risky routes with risk adverse drivers," ERSA conference papers ersa05p423, European Regional Science Association.
    3. Szeto, W.Y. & Lo, Hong K., 2008. "Time-dependent transport network improvement and tolling strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(2), pages 376-391, February.
    4. Piet Rietveld, 2011. "The Economics of Information in Transport," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 24, Edward Elgar Publishing.
    5. Gubins, Sergejs & Verhoef, Erik T. & de Graaff, Thomas, 2012. "Welfare effects of road pricing and traffic information under alternative ownership regimes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1304-1317.
    6. Enrique Fernández L., J. & de Cea Ch, Joaquín & Germán Valverde, G., 2009. "Effect of advanced traveler information systems and road pricing in a network with non-recurrent congestion," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(5), pages 481-499, June.
    7. Guohui Zhang & Zhong Wang & Khali Persad & C. Walton, 2014. "Enhanced traffic information dissemination to facilitate toll road utilization: a nested logit model of a stated preference survey in Texas," Transportation, Springer, vol. 41(2), pages 231-249, March.
    8. André de Palma & Robin Lindsey & Nathalie Picard, 2012. "Risk Aversion, the Value of Information, and Traffic Equilibrium," Transportation Science, INFORMS, vol. 46(1), pages 1-26, February.
    9. Rouhani, Omid M. & Oliver Gao, H., 2014. "An advanced traveler general information system for Fresno, California," Transportation Research Part A: Policy and Practice, Elsevier, vol. 67(C), pages 254-267.
    10. André de Palma & Nathalie Picard, 2006. "Equilibria and Information Provision in Risky Networks with Risk-Averse Drivers," Transportation Science, INFORMS, vol. 40(4), pages 393-408, November.

    More about this item

    Keywords

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    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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