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Micro-foundations of Congestion and Pricing: A Game Theory Perspective

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  • David Levinson

    ()
    (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)

Abstract

This paper develops congestion theory and congestion pricing theory from its microfoundations, the interaction of two or more vehicles. Using game theory, with a two-player game it is shown that the emergence of congestion depends on the players-relative valuations of early arrival, late arrival, and journey delay. Congestion pricing can be used as a cooperation mechanism to minimize total costs (if returned to the players). The analysis is then extended to the case of the three-player game, which illustrates congestion as a negative externality imposed on players who do not themselves contribute to it.

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File URL: http://nexus.umn.edu/Papers/Microfoundations.pdf
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File URL: http://dx.doi.org/doi:10.1016/j.tra.2005.02.021
File Function: First version, 2007
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Bibliographic Info

Paper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number 200504.

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Date of creation: 2005
Date of revision:
Publication status: Published in Transportation Research part A Volume 39, Issues 7-9 , August-November 2005, Pages 691-704. [
Handle: RePEc:nex:wpaper:microfoundations

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Postal: Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455
Phone: +01 (612) 625-6354
Fax: +01 (612) 626-7750
Web page: http://nexus.umn.edu
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Related research

Keywords: Game Theory; Congestion; Queueing; Traffic Flow; Congestion Pricing; Road Pricing; Value Pricing .;

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References

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  1. David Levinson, 2000. "Revenue Choice on a Serial Network," Working Papers 200001, University of Minnesota: Nexus Research Group.
  2. Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
  3. Richard Arnott & Andre de Palma & Robin Lindsey, 1995. "Recent Developments in the Bottleneck Model," Boston College Working Papers in Economics 305., Boston College Department of Economics.
  4. C. Robin Lindsey & Erik T. Verhoef, 2000. "Traffic Congestion and Congestion Pricing," Tinbergen Institute Discussion Papers 00-101/3, Tinbergen Institute.
  5. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1990. "Economics of a bottleneck," Journal of Urban Economics, Elsevier, vol. 27(1), pages 111-130, January.
  6. S.C. Littlechild & G.F. Thompson, 1977. "Aircraft Landing Fees: A Game Theory Approach," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 186-204, Spring.
  7. C. Robin Lindsey & Erik T. Verhoef, 2000. "Traffic Congestion and Congestion Pricing," Tinbergen Institute Discussion Papers 00-101/3, Tinbergen Institute.
  8. David Levinson, 1999. "Tolling at a Frontier: A Game Theoretic Analysis," Working Papers 199904, University of Minnesota: Nexus Research Group.
  9. 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.
  10. 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.
  11. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
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Cited by:
  1. Holguín-Veras, José, 2011. "Urban delivery industry response to cordon pricing, time-distance pricing, and carrier-receiver policies in competitive markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(8), pages 802-824, October.
  2. 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.
  3. Shanjiang Zhu & David Levinson & Lei Zhang, 2007. "An Agent-based Route Choice Model," Working Papers 000089, University of Minnesota: Nexus Research Group.
  4. Xiao, Feng & Shen, Wei & Michael Zhang, H., 2012. "The morning commute under flat toll and tactical waiting," Transportation Research Part B: Methodological, Elsevier, vol. 46(10), pages 1346-1359.
  5. Xi Zou & David Levinson, 2006. "A Multi-Agent Congestion and Pricing Model," Working Papers 200605, University of Minnesota: Nexus Research Group.
  6. Yaron Hollander & Joseph Prashker, 2006. "The applicability of non-cooperative game theory in transport analysis," Transportation, Springer, vol. 33(5), pages 481-496, 09.
  7. Holgui­n-Veras, Jose & Cetin, Mecit & Xia, Shuwen, 2006. "A comparative analysis of US toll policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(10), pages 852-871, December.
  8. Feng Xiao & Zhen Qian & H. Zhang, 2011. "The Morning Commute Problem with Coarse Toll and Nonidentical Commuters," Networks and Spatial Economics, Springer, vol. 11(2), pages 343-369, June.
  9. Otsubo, Hironori & Rapoport, Amnon, 2008. "Vickrey's model of traffic congestion discretized," Transportation Research Part B: Methodological, Elsevier, vol. 42(10), pages 873-889, December.
  10. Ieromonachou, Petros & Warren, James, 2008. "Policy Packages as potential routes to urban road pricing in the UK," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 40, pages 106-123.
  11. Holgun-Veras, Jos & Cetin, Mecit, 2009. "Optimal tolls for multi-class traffic: Analytical formulations and policy implications," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 445-467, May.

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