Product Differentiation on Roads

By Erik T. Verhoef, Kenneth Small. Journal of Transport Economics and Policy, 2004

201 citations recorded by the source corpus.

The authors explore the properties of various types of public and private pricing on a congested road network, with heterogeneous users, and allowing for elastic demand. The network allows them to model certain features of real-world significance: pricing restrictions on either complementary or substitute links, as well as interactions between different user groups on shared links. They find that revenue-maximising pricing is much less efficient than welfare-maximising pricing, but this difference is mitigated by the product differentiation made possible with heterogeneous users. Ignoring heterogeneity causes the welfare benefits of a policy of current interest, namely second-best pricing of one of two parallel links, to be dramatically underestimated. Unlike first-best policies, secondbest policies are in danger of losing much of their potential effectiveness if heterogeneity is ignored when setting toll levels.

Subfields: Automotive Engineering, Control and Systems Engineering, Transportation

View Paper: https://www.semanticscholar.org/paper/80286f5a18c2f4a2eb388e515415d8408ace9e5e

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Automotive Engineering

1. Alejandro Tirachini
2. John M. Rose
3. David A. Hensher
4. Kenneth Small
5. Dániel Hörcher

In Control and Systems Engineering

1. John M. Rose
2. David A. Hensher
3. Shuaian Wang
4. Zhiyuan Liu
5. Alejandro Tirachini
6. Qiang Meng
7. Kenneth Small

In Transportation

1. John M. Rose
2. David A. Hensher
3. Alejandro Tirachini
4. Kenneth Small
5. Qiang Meng
6. Shuaian Wang
7. Zhiyuan Liu
8. Stephane Hess

Citations in the corpus

• The bottleneck model: An assessment and interpretation (2015, methodology): “Along with the static model of Walters (1961), it has become a standard tool for understanding congestion and predicting the results of policies or other factors related to it. What is the future of this line of analysis? What should it be? The situation seems ripe for something with greater realism”
• Optimal Distance Tolls under Congestion Pricing and Continuously Distributed Value of Time (2012, background): “To reflect this variation, it is more rational to formulate the VOT as a continuously distributed random variable rather than a fixed (mean) value (Verhoef and Small, 2004; Small et al., 2005; van den Berg and Verhoef, 2011).”
• Multimodal pricing and optimal design of urban public transport: The interplay between traffic congestion and bus crowding (2014, background): “…model also ignores issues of income distribution (Dodgson and Topham, 1987; Mayeres and Proost, 1997), heterogeneity in the value of time savings (Verhoef and Small, 2004) and that road capacity may also be endogenous (De Borger and Wouters, 1998; Arnott and Yan, 2000), all dimensions that are…”