Competing Transport Networks
In a circular city model, I consider network design and pricing decisions for a single fast transport connection that faces competition from a slower but better accessible transport mode. To access the fast transport network individuals have to make complementary trips by slow mode. This fact has interesting implications on the location decisions. I show that in the presence of competition the profit-maximizing and socially optimal decision would be to cluster the two stations. By contrast, in the absence of competition both a profit-maximizing firm and a social planner would locate the two stations on opposite sides of the circle.
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|Tinbergen Institute Discussion Paper Series|
van der Leij, M.J. (2003). Competing Transport Networks (No. TI 03-009/1). Tinbergen Institute Discussion Paper Series. Retrieved from http://hdl.handle.net/1765/6785