The economics of motorist information systems revisited

Abstract

The literature on the implications of the implementation of motorist information systems is ambiguous, particularly with respect to the economic consequences. This paper aims to shed more light on the potential economic costs and benefits of these new technologies by reviewing and combining results obtained in the literature. Furthermore, future research directions, essential for an increased understanding of these systems, are pointed out. It is first argued that a motorist information system is not a normal economic good; the benefits accruing to the equipped road users are dependent on the level of market penetration. At most levels of market penetration a motorist information system is most likely to generate a positive external effect for non‐equipped motorists and a negative external effect for those already equipped. However, in terms of travel time, the equipped road users will outperform the non‐equipped ones. Next, the economic consequences of these peculiarities are identified, particularly with respect to the role of the government. Attention is also paid to the traffic generating properties and the market potential of motorist information systems. It is concluded that the implementation of a motorist information system will, owing to an efficiency improvement on the road network, generate more traffic. The size of this newly generated traffic is uncertain and dependent on the kind of information system, the behavioural responses of the road users, the particular network under consideration and the level of market penetration. This paper finally concludes that, particularly in networks with recurrent congestion, the benefits to equipped drivers diminish as the level of market penetration increases. These systems have a better economic perspective in volatile road networks, i.e. networks with non‐recurrent congestion.