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Agent-Based Model of Price Competition, Capacity Choice, and Product Differentiation on Congested Networks

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  • Lei Zhang
  • David M. Levinson
  • Shanjiang Zhu

Abstract

Using consistent agent-based techniques, this research explores the welfare consequences of product differentiation on congested networks. The economic analysis focuses on the source, evolution, measurement, and impact of product differentiation with heterogeneous users on a mixed ownership network. Path differentiation and space differentiation are defined and measured for a base scenario and several variants. The findings favour a fixed-rate road pricing policy compared to complete pricing freedom on toll roads. It is also shown that the impact of production differentiation on welfare is not always positive and depends on the level of user heterogeneity. © 2008 LSE and the University of Bath

Suggested Citation

  • Lei Zhang & David M. Levinson & Shanjiang Zhu, 2008. "Agent-Based Model of Price Competition, Capacity Choice, and Product Differentiation on Congested Networks," Journal of Transport Economics and Policy, University of Bath, vol. 42(3), pages 435-461, September.
    • Handle: RePEc:tpe:jtecpo:v:42:y:2008:i:3:p:435-461
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    Citations

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    Cited by:

    1. Shanjiang Zhu & David Levinson, 2015. "Do People Use the Shortest Path? An Empirical Test of Wardrop’s First Principle," PLOS ONE, Public Library of Science, vol. 10(8), pages 1-18, August.
    2. Zheng, Nan & Waraich, Rashid A. & Axhausen, Kay W. & Geroliminis, Nikolas, 2012. "A dynamic cordon pricing scheme combining the Macroscopic Fundamental Diagram and an agent-based traffic model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1291-1303.
    3. Zhu, Shanjiang & Du, Longyuan & Zhang, Lei, 2013. "Rationing and pricing strategies for congestion mitigation: Behavioral theory, econometric model, and application in Beijing," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 210-224.
    4. Zheng, Nan & Geroliminis, Nikolas, 2020. "Area-based equitable pricing strategies for multimodal urban networks with heterogeneous users," Transportation Research Part A: Policy and Practice, Elsevier, vol. 136(C), pages 357-374.
    5. Paul Koster & Erik T. Verhoef & Simon Shepherd & David Watling, 2014. "Probabilistic Choice and Congestion Pricing with Heterogeneous Travellers and Price-Sensitive Demand," Tinbergen Institute Discussion Papers 14-078/VIII, Tinbergen Institute, revised 13 Nov 2014.
    6. Theodore Tsekeris & Klimis Vogiatzoglou, 2011. "Spatial agent-based modeling of household and firm location with endogenous transport costs," Netnomics, Springer, vol. 12(2), pages 77-98, July.
    7. van den Berg, Vincent A.C. & Verhoef, Erik T., 2012. "Is the travel time of private roads too short, too long, or just right?," Transportation Research Part B: Methodological, Elsevier, vol. 46(8), pages 971-983.
    8. Koster, Paul & Verhoef, Erik & Shepherd, Simon & Watling, David, 2018. "Preference heterogeneity and congestion pricing: The two route case revisited," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 137-157.
    9. Mengying Cui & David Levinson, 2021. "Shortest paths, travel costs, and traffic," Environment and Planning B, , vol. 48(4), pages 828-844, May.
    10. Bataille, Marc & Steinmetz, Alexander, 2013. "Intermodal competition on some routes in transportation networks: The case of inter urban buses and railways," DICE Discussion Papers 84, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    11. Filipowski, Jacek & Kamiński, Bogumił & Mashatan, Atefeh & Prałat, Paweł & Szufel, Przemysław, 2021. "Optimization of the cost of urban traffic through an online bidding platform for commuters," Economics of Transportation, Elsevier, vol. 25(C).

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