Welfare effects of road pricing and traffic information under alternative ownership regimes

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Abstract

This paper models strategic interactions between a road supplier, a provider of traffic information, and road users, with stochastic travel times. Using a game-theoretical analysis of suppliers' pricing strategies, we assess the social welfare effects of traffic information under various ownership regimes. The results show that the distortive welfare effect of monopolistic information pricing appears relatively small. Collusion of the road operator and information provider yields higher social welfare than independent pricing by two firms. The intuition behind this result resembles that behind the welfare effects of double marginalization, but is not exactly the same, as traffic information is not strictly complementary to road use. © 2012 Elsevier Ltd.
Original languageEnglish
Pages (from-to)1304-1317
Number of pages14
JournalTransportation Research. Part A: Policy & Practice
Volume46
Issue number8
Early online date28 Jun 2012
DOIs
Publication statusPublished - 2012

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