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Welfare Effects of Road Pricing and Traffic Information under Alternative Ownership Regimes

Author

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  • Sergejs Gubins

    (VU University Amsterdam)

  • Erik T. Verhoef

    (VU University Amsterdam)

  • Thomas de Graaff

    (VU University Amsterdam)

Abstract

This paper models strategic interactions between a product supplier, a provider of information about product quality, and end users, in the context of road transportation. Using a game-theoretical analysis of suppliers' pricing strategies, we assess the social welfare effects of traffic information under various road markets with different ownership regimes. The results show that in this context, the distortive welfare effect of monopolistic information pricing appears small to negligible. Collusion of the road operator and information provider yields higher social welfare than independent pricing by two firms. The intuition behind this result resembles that behind the welfare effects of double marginalization, but it is not exactly the same, as traffic information is not strictly complementary to road use.

Suggested Citation

  • Sergejs Gubins & Erik T. Verhoef & Thomas de Graaff, 2010. "Welfare Effects of Road Pricing and Traffic Information under Alternative Ownership Regimes," Tinbergen Institute Discussion Papers 10-091/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20100091
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    Cited by:

    1. 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.

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    Keywords

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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • 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

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