Bottleneck road congestion pricing with a competing railroad service

Abstract

Abstract The paper examines the efficiency of different road pricing regimes in reducing the total costs of travel when a competing railroad service is available. Extending the two-mode model developed by Tabuchi [J. Urban Economics 34 (1993) 414–431], we show that when the railroad fare is set equal to average cost the difference in efficiency among the fine-toll and the uniform-toll regimes is reduced or possibly reversed. The extent of the reversal or reduction depends on the amount of fixed railroad costs.