Agent-Based Model of Price Competition, Capacity Choice, and Product Differentiation on Congested Networks

Journal of Transport Economics and Policy, Vol. 42, No. 3, pp. 435-461, September 2008

27 Pages Posted: 7 Jan 2011 Last revised: 7 Sep 2014

Lei Zhang

Oregon State University

David Matthew Levinson

affiliation not provided to SSRN

Shanjiang Zhu

University of Minnesota - Twin Cities

Date Written: August 1, 2008

Abstract

Using consistent agent-based techniques, this research explores the welfare consequences of product differentiation on congested networks. The economic analysis focuses on the source, evolution, measurement, and impact of product differentiation with heterogeneous users on a mixed ownership network. Path differentiation and space differentiation are defined and measured for a base scenario and several variants. The findings favour a fixed-rate road pricing policy compared to complete pricing freedom on toll roads. It is also shown that the impact of production differentiation on welfare is not always positive and depends on the level of user heterogeneity.

Keywords: agent-based, welfare, networks, congestion, transportation, path differentiation

JEL Classification: R40, R41, C00

Suggested Citation

Zhang, Lei and Levinson, David Matthew and Zhu, Shanjiang, Agent-Based Model of Price Competition, Capacity Choice, and Product Differentiation on Congested Networks (August 1, 2008). Journal of Transport Economics and Policy, Vol. 42, No. 3, pp. 435-461, September 2008. Available at SSRN: https://ssrn.com/abstract=1735676

Lei Zhang

Oregon State University ( email )

Bexell Hall 200
Corvallis, OR 97331
United States

David Matthew Levinson (Contact Author)

affiliation not provided to SSRN

Shanjiang Zhu

University of Minnesota - Twin Cities ( email )

420 Delaware St. SE
Minneapolis, MN 55455
United States

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