The interaction between tolls and capacity investment in serial and parallel transport networks

Bruno De Borger, Fay Dunkerley and Stef Proost

No 2006113, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The purpose of this paper is to compare the interaction between pricing and capacity decisions on simple serial and parallel transport networks. When individual links of the network are operated by different regional or national authorities, toll and capacity competition is likely to result. Moreover, the problem is potentially complicated by the presence of both local and transit demand on each link of the network. We bring together and extend the recent literature on the topic and, using both theory and numerical simulation techniques, provide a careful comparison of toll and capacity interaction on serial and parallel network structures. First, we show that there is more tax exporting in serial transport corridors than on competing parallel road networks. Second, the inability to toll transit has quite dramatic negative welfare effects on parallel networks. On the contrary, in serial transport corridors it may actually beunde sirableto allow thetolling of transit at all. Third, if the links are exclusively used by transit transport, toll and capacity decisions are independent in serial networks. This does not generally hold in the presence of local transport. Moreover, it contrasts with a parallel setting where regional authorities compete for transit; in that case, regional investment in capacity leads to lower Nash equilibrium tolls.

Keywords: congestion pricing; transport investment; transit traffic (search for similar items in EconPapers)
JEL-codes: H23 H71 R41 R48 (search for similar items in EconPapers)
Date: 2006-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The Interaction between Tolls and Capacity Investment in Serial and Parallel Transport Networks (2008)
Working Paper: The interactin between tolls and capacity investment in serial and parallel transport networks (2006)
Working Paper: The interaction between tolls and capacity investment in serial and parallel transport networks (2006)
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