Competing Transport Networks
Tinbergen Institute Discussion Paper No. 2003-009/1
23 Pages Posted: 24 May 2003
Date Written: January 2003
In a circular city model, I consider network design and pricing decisions for a single fast transport connection that faces competition from a slower but better accessible transport mode. To access the fast transport network individuals have to make complementary trips by slow mode. This fact has interesting implications on the location decisions. I show that in the presence of competition the profit-maximizing and socially optimal decision would be to cluster the two stations. By contrast, in the absence of competition both a profit-maximizing firm and a social planner would locate the two stations on opposite sides of the circle.
Keywords: Networks, Transportation, Competition, Market area, Circular city
JEL Classification: L91, D40.
Suggested Citation: Suggested Citation