The Market for Traffic Information-Study of Industry Structure and Prospects

The market for traffic information has grown considerably in the past 10 years. Traffic information is different from other goods because the cost to users is negligible and the product is indirectly priced. As a result of these unique characteristics, the classic economic model can not be applied to determine the price or the amount of information which would be produced and consumed under competitive equilibrium.  Examination of the history of traffic information as a marketable good and the structure of the market indicate that traffic information providers are experiencing significant economies-of-scale while the industry is migrating toward a monopolistic state. The market for commercial broadcast information has proven to be quite profitable for private industries.  At the same time, a market for repackaged traffic information has developed; various commercial products and services can be derived from the data retrieved from traffic information systems.  However, the companies selling customized information have not experienced the same level of success as traffic information providers.  To explain this disparity, a comparison is made between the market for customized and commercial information.  In addition, policies which maximize the benefits produced from traffic information are proposed.  It was concluded that the industry is self-sustaining without public finance and that competition within local markets should be maintained.