The Downs-Thomson Paradox with monopoly transit operator and heterogeneous commuters

Abstract

This paper studies the occurrence of the Downs-Thomson Paradox with monopoly transit operator and heterogeneous commuters. The Downs-Thomson Paradox (Downs, 1962; Thomson, 1977) occurs in the sense that capacity expansion produces counterproductive effect on the overall network performance where the highway is in parallel of a transit line on the same corridor, and the shifting of traffic volume from transit system could make the highway more congested while transit service level also decreases due to shrinking revenue. In a recent paper, Zhang and Yang (2013) investigated the occurrence of the Downs-Thomson Paradox considering monopoly transit scheme with homogeneous commuters. In that paper, it is shown that under such operating strategies that to increase frequency or cut ticket price as reactions to highway capacity expansion, there would be no D-T Paradox. The purpose of the present paper is to further analyze the occurrence of the D-T Paradox in more general settings.