Autonomous Cars and Dynamic Bottleneck Congestion Revisited: How In-Vehicle Activities Determine Aggregate Travel Patterns

Tinbergen Institute Discussion Paper 2019-067/VIII

38 Pages Posted: 1 Oct 2019

See all articles by Xiaojuan Yu

Xiaojuan Yu

VU University Amsterdam

Vincent A.C. van den Berg

VU University Amsterdam; Tinbergen Institute

Erik Verhoef

VU University Amsterdam

Date Written: September 20, 2019

Abstract

We investigate the impacts of in-vehicle activities of commuters in the autonomous car on aggregate travel patterns. We allow for an autonomous car to affect the utility difference between being at home and being in the vehicle differently than the utility difference between being at work and being in the vehicle, compared to the differences experienced with a normal car. This affects the relative importance of values of travel delays, schedule delays early, and schedule delays late. Hence multiple possible changes in travel patterns may occur when autonomous cars become available. Switching to an autonomous vehicle may impose a net negative or positive externality, by raising the marginal external cost of autonomous cars themselves while lowering that of normal cars. We examine three provision regimes: marginal cost pricing, second-best pricing and profit-maximizing pricing by a private monopoly. The second-best mark-up (over marginal cost) rises with the price sensitivity, due to the increasing marginal external cost. Surprisingly, for the monopoly, mark-up may rise or fall with the price sensitivity, depending on the relative strength of the externality and of market power, where the former tends to raise it, and the latter tends to reduce it. Furthermore, the difference of the mark-up between private monopoly and second-best public provision falls as the demand becomes more price-sensitive.

Keywords: Autonomous cars, Bottleneck model, Traffic congestion, Private vs public provision

JEL Classification: H23, D62, R48

Suggested Citation

Yu, Xiaojuan and van den Berg, Vincent A.C. and Verhoef, Erik, Autonomous Cars and Dynamic Bottleneck Congestion Revisited: How In-Vehicle Activities Determine Aggregate Travel Patterns (September 20, 2019). Tinbergen Institute Discussion Paper 2019-067/VIII, Available at SSRN: https://ssrn.com/abstract=3457298 or http://dx.doi.org/10.2139/ssrn.3457298

Xiaojuan Yu (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Vincent A.C. van den Berg

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

HOME PAGE: http://www.feweb.vu.nl/nl/afdelingen-en-instituten/spatial-economics/staff/v-berg/index.asp

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Erik Verhoef

VU University Amsterdam ( email )

Netherlands

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