This paper models interactions between traffic information, transport behavior of individuals, and strategic behavior of and interactions between a road operator and a provider of traffic information. We set up a simple non-congestible network with rational drivers facing stochastic travel costs due to, for instance, road accidents or other incidents. Information about actual travel costs allows drivers to change their decision whether to travel or not, and if so, which route to take. We derive demand for information from an exogenously given demand for trips and stochastic user cost functions. We consider private (profit maximizing) and public (welfare maximizing) information provision and road tolling, in various combinations. Conditional on the price of information, the demand of drivers for making trips might vary, thus influencing the possible profit and welfare form of road operation. In turn, increase of a road toll leads to a higher generalized price for travel, forcing more drivers to abstain from a trip, and hence limiting the demand for information. Interdependence between road operation and information provision calls for a game-theoretical analysis of the pricing strategies, which did not get much attention in the literature so far. We determine Nash equilibria and welfare implications of the strategic behavior of market partakers, under various industrial organizational set-ups of the market”.
PhD Lunch Seminars Amsterdam
- Speaker(s)
- Sergejs Gubins (VU University Amsterdam)
- Date
- 2010-04-06
- Location
- Amsterdam