The Two-Mode Problem: Second-Best Pricing and Capacity

Richard Arnott () and An Yan ()
Additional contact information
An Yan: Boston College

No 474, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: Suppose that there are two congestible modes of travel from A to B - road and rail for concreteness - which are imperfect substitutes in demand. Road congestion from A to B is underpriced; this is an unalterable distortion. Compared to the first best, should the transportation planner choose a wider or narrower road, raise or lower the rail fare, and expand or contract rail capacity? This paper provides a synthetic review of the literature on the problem, presents some new results, and discusses directions for future research on this and related second-best problems.

Keywords: second-best; pricing; investement; road; rail (search for similar items in EconPapers)
JEL-codes: R41 R42 D61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind
Date: 2000-09-29
View list of references View citations in EconPapers

Downloads: (external link)
http://fmwww.bc.edu/EC-P/WP474.pdf main text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:474

Access Statistics for this paper

More papers in Boston College Working Papers in Economics from Boston College Department of Economics
Address: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA
Contact information at EDIRC.
Series data maintained by Christopher F Baum ().