ENDOGENISING DEMAND FOR INFORMATION IN ROAD TRANSPORT

In this paper, the impact of endogenous information provision to drive rs in road transport is investigated. A static economic equilibrium mo del is used, which allows potential road users to buy information on t he prevailing (stochastic) traffic situation. It takes for granted tha t an indiviual will try to acquire proper information when the private benefits of doing so exceed the private costs. By using an informatio n model for road users, the interesting result is found that the provi sion of endogenous information leads to a strict Pareto improvement. F urthermore, the model shows that - depending on the price of informati on - it can be efficiency improving to subsidise or lax the motorist i nformation to the user. Finally, there is a relationship between fine congestion pricing and subsidising motorist information. It turns out that the social welfare maximising subsidy under first-best congestion pricing is equal to zero. However, subsidising information may be an attractive policy instrument when a flat congestion pricing scheme is preferred.