 The Downs–Thomson paradox with imperfect mode substitutes and alternative transit administration regimesFangni Zhang, Charles Lindsey () and Hai Yang Transportation Research Part B: Methodological, 2016, vol. 86, issue C, 104-127 Abstract: The Downs–Thomson paradox (D–T paradox) occurs when expansion of a congested and untolled highway undermines scale economies of a competing transit service, leaving users of both modes worse off. The standard analysis of the D–T paradox is based on several stringent assumptions: fixed total travel demand, perfect substitutability between automobile and transit trips, and no transit crowding. This paper re-examines the paradox when these assumptions are relaxed while retaining the usual assumption that there is no congestion interaction between the modes. It also broadens consideration to alternative transit administration regimes. In the standard treatment the transit operator is obliged to cover its costs. In this paper we also study two other regimes: transit profit maximization, and system-wide welfare maximization with no financing constraint. We examine how the transit system operator responds to highway capacity expansion in each regime, and how this affects welfare for drivers and transit users. We show that in all regimes the full price of transit declines only if the full price of driving falls as well. Thus, drivers are more likely to benefit from highway expansion than transit riders. The D–T paradox cannot occur in the profit maximization or unconstrained welfare maximization regimes. In the traditional self-financing regime transit service deteriorates, but the D–T paradox is not inevitable. Numerical analysis suggests that it can occur only when automobile and transit trips are nearly perfect substitutes. Keywords: Highway expansion; Responsive transit service; Imperfect substitutability; Transit crowding; Downs–Thomson paradox (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:transb:v:86:y:2016:i:c:p:104-127 Ordering information: This journal article can be ordered from DOI: 10.1016/j.trb.2016.01.013 Access Statistics for this article Transportation Research Part B: Methodological is currently edited by Fred Mannering More articles in Transportation Research Part B: Methodological from Elsevier |
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