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The Ramsey problem for congestible facilities

  • Arnott, Richard
  • Kraus, Marvin

In recent years, a new set of models drawing on Vickrey [1969] has been developed to analyze the economics of congestible facilities. These models are structural in that they derive the cost function from consumers' time-of-use decisions and the congestion technology. Standard models, in contrast, simply assume the general form of the cost function. We apply the new approach to analyze the Ramsey problem for a congestible facility, and show that the solution generally entails cost inefficiency. Standard models have failed to reveal this result because they treat the cost function as completely determined by technology.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 50 (1993)
Issue (Month): 3 (March)
Pages: 371-396

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Handle: RePEc:eee:pubeco:v:50:y:1993:i:3:p:371-396
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  1. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
  2. Richard Arnott & Andre de Palma & Robin Lindsey, 1987. "Bottleneck Congestion with Elastic Demand," Working Papers 690, Queen's University, Department of Economics.
  3. Braid, Ralph M., 1989. "Uniform versus peak-load pricing of a bottleneck with elastic demand," Journal of Urban Economics, Elsevier, vol. 26(3), pages 320-327, November.
  4. Guesnerie Roger, 1979. "Second best pricing rules in the boiteux tradition : derivation, review and discussion," CEPREMAP Working Papers (Couverture Orange) 7920, CEPREMAP.
  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. Richard Arnott, 1986. "Information and Time-Of-Use Decisions in Stochastically Congestable Facilities," Discussion Papers 788, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Smith, M. J., 1983. "The existence and calculation of traffic equilibria," Transportation Research Part B: Methodological, Elsevier, vol. 17(4), pages 291-303, August.
  8. Guesnerie Roger & Roberts Kevin, 1980. "Effective policy tools and quantity controls," CEPREMAP Working Papers (Couverture Orange) 8014, CEPREMAP.
  9. Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-83, June.
  10. Sam Bucovetsky, 1984. "On the Use of Distributional Waits," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 699-717, November.
  11. Greenwald, Bruce C & Stiglitz, Joseph E, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 229-64, May.
  12. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
  13. Alan J. Auerbach, 1982. "The Theory of Excess Burden and Optimal Taxation," NBER Working Papers 1025, National Bureau of Economic Research, Inc.
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