The Interaction between Tolls and Capacity Investment in Serial and Parallel Transport Networks

34 Pages Posted: 28 Nov 2006

See all articles by Bruno De Borger

Bruno De Borger

University of Antwerp - Department of Economics

Fay Dunkerley

KU Leuven - Department of Economics

Stef Proost

KU Leuven - Department of Economics

Date Written: November 2006

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

JEL Classification: H23, H71, R41, R48

Suggested Citation

De Borger, Bruno and Dunkerley, Fay and Proost, Stef V., The Interaction between Tolls and Capacity Investment in Serial and Parallel Transport Networks (November 2006). Available at SSRN: https://ssrn.com/abstract=947668 or http://dx.doi.org/10.2139/ssrn.947668

Bruno De Borger (Contact Author)

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium
+32/3/220.40.31 (Phone)
+32/3/220.47.99 (Fax)

Fay Dunkerley

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

Stef V. Proost

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
016 32 66 35 (Phone)
016 32 67 96 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
64
Abstract Views
715
rank
394,197
PlumX Metrics