Optimizing Policies for Transport: accounting for Industrial Organization in Network markets
The motivation for the OPTION project stems from the observation that current transport policy analyses typically ignore the strategic behaviour of ‘large actors’. To an increasing extent, however, it is realized that transport systems and markets are often more complex than perceived, due to multiple private and (semi-)public stakeholders with a more-than-marginal impact on the functioning of transport markets. Such ‘large actors’ typically pursue objectives that do not (fully) run parallel to the overall public interest. In such instances, central transport policies will not have the impact that is anticipated, because these large actors change their behaviour in response to central policies, thus affecting the market outcomes. This can dramatically affect the optimal design and impacts of central policies. The project develops models incorporating large actors for a number of specific cases, e.g. integrated airport-airline networks, rail-road competition, private road supply, insurance companies and traffic accidents, automated highways and electric vehicles, and taxi markets. These transport policy problems are not only of great academic interest, but also present some of the greatest challenges faced by transport policy makers in their daily operations. A specific methodological challenge is the analytical and numerical derivation of ‘second-best’ policy rules.
SPONSOR
This research is financed by the ERC - European Research Council, Advanced Grant.
START AND END DATE
The project runs from 01-05-2010 to 01-05-2015.