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
Tinbergen Institute

van der Leij, M.J. (2003). Competing Transport Networks (No. TI 03-009/1). Tinbergen Institute Discussion Paper Series. Retrieved from