Congestion and Incentives in the Age of Driverless Cars
Federico Boffa,
Alessandro Fedele and
Alberto Iozzi
No 484, CEIS Research Paper from Tor Vergata University, CEIS
Abstract:
Following the development of autonomous vehicles (AVs) and GPS systems, fleets will gain prominence over private vehicles. We analyze the welfare effects of the transition from a fully decentralized regime, in which all travelers are atomistic and do not internalize the congestion externality, to a centralized regime, where all travelers are supplied by a fleet of AVs controlled by a monopolist. In our model, heterogeneous individuals differing in the disutility from congestion may travel on one of two lanes, which may endogenously differ in the level of congestion, or they may not travel. We show that the monopolist sorts travelers across the two lanes differently than the decentralized regime. Moreover, depending on the severity of congestion costs, it may also exclude some travelers. We find that centralization is always welfare detrimental when the monopolist does not ration travel. If instead rationing occurs, centralization may be welfare beneficial, provided that congestion costs are sufficiently high. We then analyze how to restore first best with road taxes. While congestion charges are optimal under decentralization, taxes differ markedly in a centralized regime, where restoring first best may require subsidizing the monopolist.
Keywords: autonomous vehicles; congestion externality; fleets; sorting; rationing. (search for similar items in EconPapers)
JEL-codes: R11 R41 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2020-05-13, Revised 2020-05-13
New Economics Papers: this item is included in nep-tre and nep-ure
References: Add references at CitEc
Citations:
Downloads: (external link)
https://ceistorvergata.it/RePEc/rpaper/RP484.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: https://EconPapers.repec.org/RePEc:rtv:ceisrp:484
Ordering information: This working paper can be ordered from
CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
https://ceistorvergata.it
Access Statistics for this paper
More papers in CEIS Research Paper from Tor Vergata University, CEIS CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma. Contact information at EDIRC.
Bibliographic data for series maintained by Barbara Piazzi ().