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Manipulable Congestion Tolls

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  • Jan K. Brueckner

    ()

  • Erik T. Verhoef

    ()
    (Department of Spacial Economics, VU University, Amsterdam)

Abstract

The recent literature on congestion pricing with large agents contains a remarkable inconsistency: though agents are large enough to recognize self-imposed congestion and exert market power over prices, they do not take into account the impact of their own actions on the magnitude of congestion tolls. When large agents are confronted with tolls derived under this parametric assumption but understand the rule used to generate them, the toll system will no longer guide the market to the social optimum. To address this problem, the present paper derives alternate, manipulable toll rules, which are designed to achieve the social optimum when agents anticipate the full impact of their actions on toll liabilities.

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Bibliographic Info

Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 080915.

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Length: 22 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:irv:wpaper:080915

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Keywords: Pigouvian taxes; Congestion tolls;

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References

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  1. Forbes, Silke J., 2008. "The effect of air traffic delays on airline prices," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1218-1232, September.
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  10. Brueckner, Jan K. & Van Dender, Kurt, 2008. "Atomistic congestion tolls at concentrated airports? Seeking a unified view in the internalization debate," Journal of Urban Economics, Elsevier, vol. 64(2), pages 288-295, September.
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  15. Erik T. Verhoef, 2008. "Congestion Pricing, Slot Sales and Slot Trading in Aviation," Tinbergen Institute Discussion Papers 08-030/3, Tinbergen Institute.
  16. Brueckner, Jan K., 2009. "Price vs. quantity-based approaches to airport congestion management," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 681-690, June.
  17. Daniel, Joseph I. & Harback, Katherine Thomas, 2009. "Pricing the major US hub airports," Journal of Urban Economics, Elsevier, vol. 66(1), pages 33-56, July.
  18. Daniel, Joseph I, 1995. "Congestion Pricing and Capacity of Large Hub Airports: A Bottleneck Model with Stochastic Queues," Econometrica, Econometric Society, vol. 63(2), pages 327-70, March.
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Citations

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Cited by:
  1. Hoffman, Karla & Berardino, Frank & Hunter, George, 2013. "Congestion pricing applications to manage high temporal demand for public services and their relevance to air space management," Transport Policy, Elsevier, vol. 28(C), pages 28-41.
  2. Vincent A.C. van den Berg & Erik T. Verhoef, 2011. "Is the Service Quality of Private Roads too Low, too High, or just Right when Firms compete Stackelberg in Capacity?," Tinbergen Institute Discussion Papers 11-079/3, Tinbergen Institute, revised 02 Aug 2012.
  3. Hugo Emilo Silva & Erik T. Verhoef & Vincent van den Berg, 2013. "Airline Route Structure Competition and Network Policy," Tinbergen Institute Discussion Papers 13-189/VIII, Tinbergen Institute.
  4. Lin, Ming Hsin, 2013. "Airport privatization in congested hub–spoke networks," Transportation Research Part B: Methodological, Elsevier, vol. 54(C), pages 51-67.
  5. Brueckner, Jan K., 2009. "Price vs. quantity-based approaches to airport congestion management," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 681-690, June.
  6. Silva, Hugo E. & Verhoef, Erik T. & van den Berg, Vincent A.C., 2014. "Airlines’ strategic interactions and airport pricing in a dynamic bottleneck model of congestion," Journal of Urban Economics, Elsevier, vol. 80(C), pages 13-27.
  7. Vincent Van Den Berg, 2011. "The effect of private road supply on the volume/capacity ratio when firms compete Stackelberg in Road Capacity," ERSA conference papers ersa11p1203, European Regional Science Association.
  8. Maria Dementyeva & Paul R. Koster & Erik T. Verhoef, 2013. "Regulation of Road Accident Externalities when Insurance Companies have Market Power," Tinbergen Institute Discussion Papers 13-019/VIII, Tinbergen Institute.
  9. Evangelinos, Christos, 2013. "Interessengruppen und Preissetzung im Verkehr," Discussion Papers 2/2013, Dresden University of Technology, Faculty of Transportation and Traffic Sciences "Friedrich List", Institute for Transport and Economics.
  10. Maria Dementyeva & Paul R. Koster & Erik T. Verhoef, 2013. "Regulation of Road Accident Externalities when Insurance Companies have Market Power," Tinbergen Institute Discussion Papers 13-019/VIII, Tinbergen Institute.
  11. Zhang, Anming & Zhang, Yimin, 2010. "Airport capacity and congestion pricing with both aeronautical and commercial operations," Transportation Research Part B: Methodological, Elsevier, vol. 44(3), pages 404-413, March.
  12. Erik T. Verhoef, 2012. "Cost Recovery of Congested Infrastructure under Market Power," Tinbergen Institute Discussion Papers 12-064/3, Tinbergen Institute.
  13. Hugo E. Silva & Erik T. Verhoef & Vincent A.C. van den Berg, 2012. "Airlines' Strategic Interactions and Airport Pricing in a Dynamic Bottleneck Model of Congestion," Tinbergen Institute Discussion Papers 12-056/3, Tinbergen Institute, revised 15 Jul 2013.

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