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

Bruno De Borger, Dunkerley Fay () and Stef Proost
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Dunkerley Fay: K.U.Leuven-Center for Economic Studies

Energy, Transport and Environment Working Papers Series from KU Leuven, Department of Economics - Research Group Energy, Transport and Environment

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 be undesirable to allow the tolling 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)
Pages: 36 pages
Date: 2006-07
New Economics Papers: this item is included in nep-geo, nep-mic, nep-net, nep-pbe and nep-ure
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Citations: View citations in EconPapers (4)

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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 interaction between tolls and capacity investment in serial and parallel transport networks (2006)
Working Paper: The interactin between tolls and capacity investment in serial and parallel transport networks (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:etewps:ete0607

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