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



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

Authors

Bruno de Borger, University of Antwerp,BE; Fay Dunkerley and Stef Proost, Catholic University of Leuven, BE

Description

The purpose of this paper is to compare the interaction between pricing and capacity decisions on simple serial and parallel transport networks.

Abstract

Strategic toll and capacity choices on simple serial and parallel transport networks

Bruno de Borger, Department of Economics, University of Antwerp, BE
Fay Dunkerley and Stef Proost, Department of Economics, Catholic University of Leuven, BE

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 on serial transport corridors than in 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

European Transport Conference 2006, Strasbourg

Publisher

Association for European Transport