Governmental Competition in Road Charging and Capacity Choice

Barry Ubbels, Erik Verhoef

Research output: Working paperProfessional

Abstract

In this study we have analysed policy interactions between an urban and a regional government which have different objectives (welfare of its own citizens) and two policy instruments (toll and capacity) available. Using a simulation model, we investigated the welfare consequences of the various regimes that result when both governments compete, and take sequential decisions on prices and capacities. We find that competition between governments may not be very beneficial to overall welfare in society compared with one central government. It appears that the tendency of tax exporting is very strong in this setting where commuters have to pay road tolls set by the city government. The main issue is not which exact type of game is played between the two actors, but much more whether there is cooperation (leading to first-best) or competition between governments, where of secondary importance is the question who is leading in the price stage (if there is a lea! der). Sensitivity analysis suggests that the performance for most game situations improves when demand becomes more elastic. When the price of road investment changes, the performance relative to the optimal situation remains more or less equal for all cases.
Original languageEnglish
Place of PublicationAmsterdam
PublisherTinbergen Instituut
Publication statusPublished - 2006

Publication series

NameDiscussion paper TI
No.06-036/3

Fingerprint

Government
Roads
Central government
Interaction
Simulation model
Tax
Sequential decisions
Exporting
Policy instruments
Relative performance
Regional government
Sensitivity analysis

Cite this

Ubbels, B., & Verhoef, E. (2006). Governmental Competition in Road Charging and Capacity Choice. (Discussion paper TI; No. 06-036/3). Amsterdam: Tinbergen Instituut.
Ubbels, Barry ; Verhoef, Erik. / Governmental Competition in Road Charging and Capacity Choice. Amsterdam : Tinbergen Instituut, 2006. (Discussion paper TI; 06-036/3).
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Ubbels, B & Verhoef, E 2006 'Governmental Competition in Road Charging and Capacity Choice' Discussion paper TI, no. 06-036/3, Tinbergen Instituut, Amsterdam.

Governmental Competition in Road Charging and Capacity Choice. / Ubbels, Barry; Verhoef, Erik.

Amsterdam : Tinbergen Instituut, 2006. (Discussion paper TI; No. 06-036/3).

Research output: Working paperProfessional

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Ubbels B, Verhoef E. Governmental Competition in Road Charging and Capacity Choice. Amsterdam: Tinbergen Instituut. 2006. (Discussion paper TI; 06-036/3).