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

Abstract

The purpose of this paper is to compare price and capacity competition in simple serial and parallel transport networks, where individual links are operated by different authorities. We find more tax exporting in serial transport corridors than on parallel road networks. The inability to toll transit has quite dramatic negative welfare effects on parallel networks; in serial transport corridors, it may actually be undesirable to allow the tolling of transit at all. Finally, if the links are exclusively used by transit transport, toll and capacity decisions are independent in serial networks. When regions compete for transit in a parallel setting, higher regional capacity implies lower Nash equilibrium tolls.

No More Freeways: Urban Land Use-Transportation Dynamics without Freeway Capacity Expansion

“…Research in this field has advanced from first-best to various second-best pricing schemes, from time-independent to time-varying tolls, from assumptions of homogeneous users to heterogeneous users, and from assumptions of a single system operator to various ownership regimes. The majority of previous literature on road pricing (second-based congestion pricing, in particular) is based on a small parallel network; few studies examine price competition on a serial network (Levinson 1999, De Borger et al 2006). …”

How to decide on regional infrastructure to achieve intra‐regional acceptability and inter‐regional consensus?

“…Levinson (1999) studied the problem of serial tolled links in a theoretical paper using both co‐operative and non‐co‐operative game theory, finding that without co‐operation both tolls would be overpriced. De Borger et al. (2005, 2007, 2008) have studied this problem for both a simple parallel and serial network where regional governments control each one of the links and compete on tolls and capacity.…”

“…In this paper we focus on the bypass problem where the initial link and the bypass to be built are both controlled by the same through‐traffic region. A second difference with De Borger et al. (2005, 2007, 2008) is that we allow the tolling region and the region where most through traffic originates to co‐operate and improve the non‐co‐operative equilibrium.…”