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Information and Usage of Free-Access Congestible Facilities with Stochastic Capacity and Demand

Author

Listed:
  • Arnott, Richard
  • de Palma, Andre
  • Lindsey, Robin

Abstract

The authors investigate the effect of information on users' participation decisions at a free-access congestible facility that is subject to unpredictable fluctuations in capacity and demand. With demand isoelastic in user cost and user cost isoelastic in the ratio of demand to capacity, optimal design capacity is larger with mean-preserving spreads in capacity and demand if and only if demand elasticity is less than one. Expected welfare is greater with better information. Interestingly, with nonconstant elasticity demand and/or user costs, information can be welfare reducing. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1996. "Information and Usage of Free-Access Congestible Facilities with Stochastic Capacity and Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 181-203, February.
    • Handle: RePEc:ier:iecrev:v:37:y:1996:i:1:p:181-203
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    Cited by:

    1. Lindsey, Robin, 2009. "Cost recovery from congestion tolls with random capacity and demand," Journal of Urban Economics, Elsevier, vol. 66(1), pages 16-24, July.
    2. Peer, Stefanie & Verhoef, Erik T., 2013. "Equilibrium at a bottleneck when long-run and short-run scheduling preferences diverge," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 12-27.
    3. Zhang, Rong & Verhoef, Erik T., 2006. "A monopolistic market for advanced traveller information systems and road use efficiency," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(5), pages 424-443, June.
    4. Fu, Xinying & van den Berg, Vincent A.C. & Verhoef, Erik T., 2018. "Private road networks with uncertain demand," Research in Transportation Economics, Elsevier, vol. 70(C), pages 57-68.
    5. Achim I. Czerny & Erik T. Verhoef & Anming Zhang, 2015. "A Theory of Continuous Uncertainty Types," Tinbergen Institute Discussion Papers 15-065/VIII, Tinbergen Institute.
    6. L. Denant-Boèmont & R. Petiot, 2003. "Information value and sequential decision-making in a transport setting: an experimental study," Post-Print hal-02422690, HAL.
    7. Piet Rietveld, 2011. "The Economics of Information in Transport," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 24, Edward Elgar Publishing.
    8. Fu, Xinying & van den Berg, Vincent A.C. & Verhoef, Erik T., 2018. "Private road supply in networks with heterogeneous users," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 430-443.
    9. de Palma, André & Fosgerau, Mogens, 2013. "Random queues and risk averse users," European Journal of Operational Research, Elsevier, vol. 230(2), pages 313-320.
    10. Denant-Boèmont, L. & Petiot, R., 2003. "Information value and sequential decision-making in a transport setting: an experimental study," Transportation Research Part B: Methodological, Elsevier, vol. 37(4), pages 365-386, May.
    11. van Ackere, Ann & Larsen, Erik R., 2004. "Self-organising behaviour in the presence of negative externalities: A conceptual model of commuter choice," European Journal of Operational Research, Elsevier, vol. 157(2), pages 501-513, September.
    12. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1999. "Information and time-of-usage decisions in the bottleneck model with stochastic capacity and demand," European Economic Review, Elsevier, vol. 43(3), pages 525-548, March.
    13. Nicolas Coulombel & André De Palma, 2014. "Variability of Travel Time, Congestion, and the Cost of Travel," Mathematical Population Studies, Taylor & Francis Journals, vol. 21(4), pages 220-242, December.
    14. Yu, Xiaojuan & van den Berg, Vincent A.C. & Li, Zhi-Chun, 2023. "Congestion pricing and information provision under uncertainty: Responsive versus habitual pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).
    15. André De Palma & Nathalie Picard, 2005. "Congestion on risky routes with risk adverse drivers," ERSA conference papers ersa05p423, European Regional Science Association.
    16. Lindsey, Robin & Daniel, Terry & Gisches, Eyran & Rapoport, Amnon, 2014. "Pre-trip information and route-choice decisions with stochastic travel conditions: Theory," Transportation Research Part B: Methodological, Elsevier, vol. 67(C), pages 187-207.
    17. Han, Xiao & Yu, Yun & Gao, Zi-You & Zhang, H. Michael, 2021. "The value of pre-trip information on departure time and route choice in the morning commute under stochastic traffic conditions," Transportation Research Part B: Methodological, Elsevier, vol. 152(C), pages 205-226.
    18. Xiao, Yu & Coulombel, Nicolas & Palma, André de, 2017. "The valuation of travel time reliability: does congestion matter?," Transportation Research Part B: Methodological, Elsevier, vol. 97(C), pages 113-141.
    19. André de Palma & Robin Lindsey & Nathalie Picard, 2012. "Risk Aversion, the Value of Information, and Traffic Equilibrium," Transportation Science, INFORMS, vol. 46(1), pages 1-26, February.
    20. Stennek, Johan, 1999. "The expected consumer's surplus as a welfare measure," Journal of Public Economics, Elsevier, vol. 73(2), pages 265-288, August.
    21. Lu, Zhaoyang & Meng, Qiang, 2017. "Analysis of optimal BOT highway capacity and economic toll adjustment provisions under traffic demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 100(C), pages 17-37.
    22. Emmerink, Richard H. M. & Verhoef, Erik T. & Nijkamp, Peter & Rietveld, Piet, 1997. "Information in road networks with multiple origin-destination pairs," Regional Science and Urban Economics, Elsevier, vol. 27(3), pages 217-240, June.
    23. André de Palma & Nathalie Picard, 2006. "Equilibria and Information Provision in Risky Networks with Risk-Averse Drivers," Transportation Science, INFORMS, vol. 40(4), pages 393-408, November.
    24. Nicolas Coulombel & André de Palma, 2014. "The marginal social cost of travel time variability," Post-Print hal-01100105, HAL.
    25. Rapoport, Amnon & Gisches, Eyran J. & Daniel, Terry & Lindsey, Robin, 2014. "Pre-trip information and route-choice decisions with stochastic travel conditions: Experiment," Transportation Research Part B: Methodological, Elsevier, vol. 68(C), pages 154-172.

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