Nonlinear pricing on private roads with congestion and toll collection costs
AbstractNonlinear pricing (a form of second-degree price discrimination) is widely used in transportation and other industries but it has been largely overlooked in the road-pricing literature. This paper explores the incentives for a profit-maximizing toll-road operator to adopt some simple nonlinear pricing schemes when there is congestion and collecting tolls is costly. Users are assumed to differ in their demands to use the road. Regardless of the severity of congestion, an access fee is always profitable to implement either as part of a two-part tariff or as an alternative to paying a toll. Use of access fees for profit maximization can increase or decrease welfare relative to usage-only pricing for profit maximization. Hence a ban on access fees could reduce welfare.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Transportation Research Part B: Methodological.
Volume (Year): 45 (2011)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/548/description#description
Other versions of this item:
- Lindsey, Robin & Wang, Judith & Yang, Hai, 2010. "Nonlinear Pricing on Private Roads with Congestion and Toll Collection Costs," Working Papers 2010-3, University of Alberta, Department of Economics.
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bonsall, Peter & Shires, Jeremy & Maule, John & Matthews, Bryan & Beale, Jo, 2007. "Responses to complex pricing signals: Theory, evidence and implications for road pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(7), pages 672-683, August.
- Teck-Hua Ho & Juanjuan Zhang, 2008. "Designing Pricing Contracts for Boundedly Rational Customers: Does the Framing of the Fixed Fee Matter?," Management Science, INFORMS, vol. 54(4), pages 686-700, April.
- Glazer, Amihai & Niskanen, Esko, 2000.
"Which consumers benefit from congestion tolls?,"
University of California Transportation Center, Working Papers
qt33d88115, University of California Transportation Center.
- Glazer, Amihai & Niskanen, Esko, 2000. "Which consumers benefit from congestion tolls?," University of California Transportation Center, Working Papers qt70v033nx, University of California Transportation Center.
- Amihai Glazer & Esko Niskanen, 2000. "Which Consumers Benefit from Congestion Tolls?," Discussion Papers 216, Government Institute for Economic Research Finland (VATT).
- Anja Lambrecht & Katja Seim & Bernd Skiera, 2007. "Does Uncertainty Matter? Consumer Behavior Under Three-Part Tariffs," Marketing Science, INFORMS, vol. 26(5), pages 698-710, 09-10.
- Small, Kenneth A. & Gomez-Ilbanez, Jose A., 1998. "Road Pricing for Congestion Management: The Transition from Theory to Policy," University of California Transportation Center, Working Papers qt8kk909p1, University of California Transportation Center.
- Armstrong, Mark & Doyle, Chris & Vickers, John, 1996.
"The Access Pricing Problem: A Synthesis,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 44(2), pages 131-50, June.
- Armstrong, M. & Doyle, C. & Vickers, J., 1995. "The access pricing problem: a synthesis," Discussion Paper Series In Economics And Econometrics 9532, Economics Division, School of Social Sciences, University of Southampton.
- Scotchmer, Suzanne, 1985. "Profit-maximizing clubs," Journal of Public Economics, Elsevier, vol. 27(1), pages 25-45, June.
- Skander Essegaier & Sunil Gupta & Z. John Zhang, 2002. "Pricing Access Services," Marketing Science, INFORMS, vol. 21(2), pages 139-159, June.
- Eugene Amromin & Carrie Jankowski & Richard Porter, 2007. "Transforming payment choices by doubling fees on the Illinois Tollway," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 22-47.
- Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654 Elsevier.
- Rotaris, Lucia & Danielis, Romeo & Marcucci, Edoardo & Massiani, Jérôme, 2010. "The urban road pricing scheme to curb pollution in Milan, Italy: Description, impacts and preliminary cost-benefit analysis assessment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(5), pages 359-375, June.
- Jean-Jacques Laffont & Jean Tirole, 1994.
"Access Pricing and Competition,"
94-31, Massachusetts Institute of Technology (MIT), Department of Economics.
- Laffont, Jean-Jacques & Tirole, Jean, 1992. "Access Pricing and Competition," IDEI Working Papers 19, Institut d'Économie Industrielle (IDEI), Toulouse.
- J-J. Laffont & J. Tirole, 1994. "Access Pricing and Competition," Working papers 95-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Ng, Yew-Kwang & Weisser, Mendel, 1974. "Optimal Pricing with a Budget Constraint-The Case of the Two-part Tariff," Review of Economic Studies, Wiley Blackwell, vol. 41(3), pages 337-45, July.
- Mason, Robin, 2000. "Simple competitive Internet pricing," European Economic Review, Elsevier, vol. 44(4-6), pages 1045-1056, May.
- Arun Sundararajan, 2004. "Nonlinear Pricing of Information Goods," Management Science, INFORMS, vol. 50(12), pages 1660-1673, December.
- Coyte, Peter C & Lindsey, C Robin, 1988. "Spatial Monopoly and Spatial Monopolistic Competition with Two-Part Pricing," Economica, London School of Economics and Political Science, vol. 55(220), pages 461-77, November.
- De Borger, Bruno, 2001.
"Discrete choice models and optimal two-part tariffs in the presence of externalities: optimal taxation of cars,"
Regional Science and Urban Economics,
Elsevier, vol. 31(4), pages 471-504, July.
- DE BORGER, Bruno, . "Discrete choice models and optimal two-part tariffs in the presence of externalities: Optimal taxation of cars," Working Papers 2000021, University of Antwerp, Faculty of Applied Economics.
- Edelson, Noel M, 1971. "Congestion Tolls Under Monopoly," American Economic Review, American Economic Association, vol. 61(5), pages 873-82, December.
- Nahata, Babu & Ostaszewski, Krzysztof & Sahoo, Prasanna, 1999. "Buffet Pricing," The Journal of Business, University of Chicago Press, vol. 72(2), pages 215-28, April.
- Leeson, Peter T. & Sobel, Russell S., 2008. "Costly price discrimination," Economics Letters, Elsevier, vol. 99(1), pages 206-208, April.
- David Levinson & Andrew Odlyzko, 2007. "Too Expensive to Meter: The influence of transaction costs in transportation and communication," Working Papers 200802, University of Minnesota: Nexus Research Group, revised Feb 2007.
- Oi, Walter Y, 1971. "A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly," The Quarterly Journal of Economics, MIT Press, vol. 85(1), pages 77-96, February.
- Suzanne Scotchmer, 1985. "Two-Tier Pricing of Shared Facilities in a Free-Entry Equilibrium," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 456-472, Winter.
- Domon, Koji & Ota, Koshiro, 2001. "Access pricing and market structure," Information Economics and Policy, Elsevier, vol. 13(1), pages 77-93, March.
- Ahmadi Azari, Kian & Arintono, Sulistyo & Hamid, Hussain & Rahmat, Riza Atiq O.K., 2013. "Modelling demand under parking and cordon pricing policy," Transport Policy, Elsevier, vol. 25(C), pages 1-9.
- Russo, Antonio, 2012. "Pricing of Transport Networks, Redistribution and Optimal Taxation," TSE Working Papers 12-353, Toulouse School of Economics (TSE).
- Batarce, Marco & Ivaldi, Marc, 2010. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," TSE Working Papers 10-226, Toulouse School of Economics (TSE), revised Apr 2011.
- Batarce, Marco & Ivaldi, Marc, 2011. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," CEPR Discussion Papers 8416, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.