Private road networks with uncertain demand

Abstract

We study the efficiency of private supply of roads under demand uncertainty and evaluate various regulatory policies. Due to demand uncertainty, capacity is decided before demand is known but tolls can be adjusted after demand is known. Policy implications can differ from those under deterministic de- * Corresponding author. email-addresses: x.fu@vu.nl(X. Fu), v.a.c.vanden.berg@vu.nl (V.A.C. van den Berg), e.t.verhoef@vu.nl (E.T. Verhoef) 1 mand. For instance, for serial links, the toll in the second-best zero-profit case is no longer equal to the marginal external congestion cost. In the firstbest scenario, the capacity under uncertain demand is higher than that under deterministic demand of the same expected value, though self-financing still holds in expected terms. Regulation by perfect competitive auction cannot replicate the second-best zero-profit result and thus leads to a lower welfare, whereas without uncertainty various forms of competitive auctions can attain this second-best optimum. For more complex networks, when private firms add capacity in turn, contrary to the case without demand uncertainty, some form of auction performs better than others with demand uncertainty.

Will all autonomous cars cooperate? Brands' strategic interactions under dynamic congestion

“…Our research is, from a methodological viewpoint, closely related to the growing body of literature on externality regulation in aviation and private roads when firms have market power (e.g., Daniel, 1995;de Palma and Lindsey, 2000;Brueckner, 2002;Pels and Verhoef, 2004;Van Dender, 2005;Zhang and Zhang, 2006;Silva and Verhoef, 2013;Van den Berg, 2013;Fu et al, 2018;Kuang et al, 2020). Although some of the results of social and monopolistic supply pricing that we draw upon reflect insights from earlier works, there are important differences.…”

Responsive state-dependent or habitual state-independent congestion pricing under dynamic congestion

“…The bottleneck model has been widely recognized as an important tool for modeling dynamic congestion. 1 Researchers have proposed various tolling regimes to reduce the congestion externality in dynamic congestion, such as a fully time-varying toll (e.g., Arnott et al, 1993;Yang and Huang, 1997;Van den Berg and Verhoef, 2011a, b); a step toll (Arnott et al, 1990;Laih, 1994Laih, , 2004Lindsey et al, 2012;Van den Berg, 2012), and a time-independent flat toll (Xiao et al, 2012;Silva et al, 2014;Fu et al, 2018).…”