Socially optimal pricing and investment decisions are analysed for a tollway that experiences competition from unpriced, congested roads. The resulting "second-best" problem has a simple qualitative structure: optimal tolls are set lower than they would be without the unpriced congestion. The...

This paper studies the determination of retail and wholesale prices in successive Cournot oligopolies. It is shown that (i) the ratio of retail to wholesale margins increases (decreases, resp.) as the retail part of the market becomes less (more, resp.) competitive; (ii) the ratio of margin in...