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The Ramsey problem for congestible facilities

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Author Info

  • Arnott, Richard
  • Kraus, Marvin

Abstract

In recent years, a new set of models drawing on Vickrey [1969] has been developed to analyze the economics of congestible facilities. These models are structural in that they derive the cost function from consumers' time-of-use decisions and the congestion technology. Standard models, in contrast, simply assume the general form of the cost function. We apply the new approach to analyze the Ramsey problem for a congestible facility, and show that the solution generally entails cost inefficiency. Standard models have failed to reveal this result because they treat the cost function as completely determined by technology.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 50 (1993)
Issue (Month): 3 (March)
Pages: 371-396

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Handle: RePEc:eee:pubeco:v:50:y:1993:i:3:p:371-396

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Web page: http://www.elsevier.com/locate/inca/505578

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References

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  1. Richard Arnott, 1986. "Information and Time-Of-Use Decisions in Stochastically Congestable Facilities," Discussion Papers 788, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Braid, Ralph M., 1989. "Uniform versus peak-load pricing of a bottleneck with elastic demand," Journal of Urban Economics, Elsevier, vol. 26(3), pages 320-327, November.
  3. Richard Arnott & Andre de Palma & Robin Lindsey, 1987. "Bottleneck Congestion with Elastic Demand," Working Papers 690, Queen's University, Department of Economics.
  4. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
  5. Guesnerie Roger, 1979. "Second best pricing rules in the boiteux tradition : derivation, review and discussion," CEPREMAP Working Papers (Couverture Orange) 7920, CEPREMAP.
  6. Guesnerie Roger & Roberts Kevin, 1980. "Effective policy tools and quantity controls," CEPREMAP Working Papers (Couverture Orange) 8014, CEPREMAP.
  7. Greenwald, Bruce C & Stiglitz, Joseph E, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 229-64, May.
  8. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
  9. Mohring, Herbert, 1970. "The Peak Load Problem with Increasing Returns and Pricing Constraints," American Economic Review, American Economic Association, vol. 60(4), pages 693-705, September.
  10. Alan J. Auerbach, 1986. "The Theory of Excess Burden and Optimal Taxation," NBER Working Papers 1025, National Bureau of Economic Research, Inc.
  11. Smith, M. J., 1983. "The existence and calculation of traffic equilibria," Transportation Research Part B: Methodological, Elsevier, vol. 17(4), pages 291-303, August.
  12. Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-83, June.
  13. Sam Bucovetsky, 1984. "On the Use of Distributional Waits," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 699-717, November.
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Cited by:
  1. van der Weijde, Adriaan Hendrik & Verhoef, Erik T. & van den Berg, Vincent A.C., 2013. "Competition in multi-modal transport networks: A dynamic approach," Transportation Research Part B: Methodological, Elsevier, vol. 53(C), pages 31-44.
  2. Vincent van den Berg & Erik T. Verhoef, 2011. "Congesting Pricing in a Road and Rail Network with Heterogeneous Values of Time and Schedule Delay," Tinbergen Institute Discussion Papers 11-059/3, Tinbergen Institute, revised 24 May 2012.
  3. Boronico, Jess S. & Siegel, Philip H., 1998. "Capacity planning for toll roadways incorporating consumer wait time costs," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(4), pages 297-310, May.
  4. Yang, Hai & Ye, Min & Tang, Wilson H. & Wong, S.C., 2005. "Regulating taxi services in the presence of congestion externality," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(1), pages 17-40, January.
  5. Segendorff, Björn, 1995. "The Telecommunication Market: A Survey of Theory and Empirics," Working Paper Series 442, Research Institute of Industrial Economics.
  6. Richard Arnott & Marvin Kraus, 1995. "Self-Financing of Congestible Facilities in a Growing Economy," Boston College Working Papers in Economics 304., Boston College Department of Economics.
  7. Emanuela Randon, . "Measuring Nash Equilibrium Consumption Externalities," Discussion Papers 04/08, Department of Economics, University of York.

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