When are Anonymous Congestion Charges Consistent with Marginal Cost Pricing?
AbstractThere are constraints on pricing congestible facilities. First, if heterogeneous users are observationally indistinguishable, then congestion charges must be anonymous. Second, the time variation of congestion charges may be constrained. Do these constraints undermine the feasibility of marginal cost pricing, and hence the applicability of the first-best theory of congestible facilities? We show that if heterogeneous users behave identically when using the congestible facility and if the time variation of congestion charges is unconstrained, then marginal cost pricing is feasible with anonymous congestion charges. If, however, the time variation of congestion charges is constrained, optimal pricing with anonymous congestion charges entails Ramsey pricing.
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 354..
Date of creation: 01 Mar 1997
Date of revision:
Publication status: Published, Journal of Public Economics, 1998.
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congestion; externalities; congestion pricing; clubs;
Other versions of this item:
- Arnott, Richard & Kraus, Marvin, 1998. "When are anonymous congestion charges consistent with marginal cost pricing?," Journal of Public Economics, Elsevier, vol. 67(1), pages 45-64, January.
- Richard Arnott & Marvin Kraus, 1994. "When Are Anonymous Congestion Charges Consistent with Marginal Cost Pricing?," NBER Technical Working Papers 0154, National Bureau of Economic Research, Inc.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
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