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When are Anonymous Congestion Charges Consistent with Marginal Cost Pricing?

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Author Info

  • Richard Arnott

    () (Boston College)

  • Marvin Kraus

    () (Boston College)

Abstract

There 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 Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 354..

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Date of creation: 01 Mar 1997
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Publication status: Published, Journal of Public Economics, 1998.
Handle: RePEc:boc:bocoec:354

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Web page: http://fmwww.bc.edu/EC/
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Keywords: congestion; externalities; congestion pricing; clubs;

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References

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  1. Arnott Richard & Kraus Marvin, 1995. "Financing Capacity in the Bottleneck Model," Journal of Urban Economics, Elsevier, vol. 38(3), pages 272-290, November.
  2. Henderson, J. Vernon, 1981. "The economics of staggered work hours," Journal of Urban Economics, Elsevier, vol. 9(3), pages 349-364, May.
  3. Dorfman, Robert, 1969. "An Economic Interpretation of Optimal Control Theory," American Economic Review, American Economic Association, vol. 59(5), pages 817-31, December.
  4. Berglas, Eitan & Pines, David, 1981. "Clubs, local public goods and transportation models : A synthesis," Journal of Public Economics, Elsevier, vol. 15(2), pages 141-162, April.
  5. 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.
  6. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-79, March.
  7. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
  8. Braeutigam, Ronald R., 1989. "Optimal policies for natural monopolies," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 23, pages 1289-1346 Elsevier.
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Citations

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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. Proost, S. & Van der Loo, S. & de Palma, Andre & Lindsey, Robin, 2005. "A cost-benefit analysis of tunnel investment and tolling alternatives in Antwerp," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 31, pages 83-100.
  3. Parry, Ian W.H., 2008. "Pricing Urban Congestion," Discussion Papers dp-08-35, Resources For the Future.
  4. Wuping Xin & David Levinson, 2006. "Stochastic congestion and pricing model with endogenous departure time selection and heterogeneous travelers," Working Papers 000029, University of Minnesota: Nexus Research Group.
  5. Bichsel, Robert, 2001. "Should Road Users Pay the Full Cost of Road Provision?," Journal of Urban Economics, Elsevier, vol. 50(2), pages 367-383, September.
  6. Chih-Peng Chu & Jyh-Fa Tsai, 2004. "Road Pricing models with maintenance cost," Transportation, Springer, vol. 31(4), pages 457-477, November.
  7. Jan Rouwendal, 2002. "Speed Choice, Car Following Theory and Congestion Tolling," Tinbergen Institute Discussion Papers 02-102/3, Tinbergen Institute.
  8. Arnott, Richard, 2007. "Congestion tolling with agglomeration externalities," Journal of Urban Economics, Elsevier, vol. 62(2), pages 187-203, September.
  9. Erik T. Verhoef, 2012. "Cost Recovery of Congested Infrastructure under Market Power," Tinbergen Institute Discussion Papers 12-064/3, Tinbergen Institute.
  10. Dung-Ying Lin & Avinash Unnikrishnan & S. Waller, 2011. "A Dual Variable Approximation Based Heuristic for Dynamic Congestion Pricing," Networks and Spatial Economics, Springer, vol. 11(2), pages 271-293, June.
  11. Richard Arnott & Elizaveta Shevyakhova, 2007. "Tenancy Rent Control and Credible Commitment in Maintenance," Boston College Working Papers in Economics 661, Boston College Department of Economics.
  12. Arnott, Richard & Rowse, John, 2009. "Downtown parking in auto city," Regional Science and Urban Economics, Elsevier, vol. 39(1), pages 1-14, January.
  13. C. Robin Lindsey & Erik T. Verhoef, 2000. "Traffic Congestion and Congestion Pricing," Tinbergen Institute Discussion Papers 00-101/3, Tinbergen Institute.
  14. Erik T. Verhoef & Herbert Mohring, 2007. "Self-Financing Roads," Tinbergen Institute Discussion Papers 07-068/3, Tinbergen Institute.
  15. Shanjiang Zhu & David Levinson & Lei Zhang, 2007. "An Agent-based Route Choice Model," Working Papers 000089, University of Minnesota: Nexus Research Group.

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