Optimal facility placement and discriminatory congestion pricing in neighborhoods with different time costs
In many urban areas, time costs or wages vary between neighborhoods, but there is little wage variation within a given neighborhood. Neighborhoods are often labelled "working class," "middle class," or even "wealthy." For this reason, there are many efficiency and distributional issues related to location because location largely determines access costs. Congestion also affects time costs and access. Many public policies are geared towards improving access for households in low-wage neighborhoods. Public facilities are built; some firms receive nonprofit status. In order to evaluate these policies, normative theory is needed. This paper develops theory on the optimal placement of facilities and their congestion prices in urban areas with wage variation between neighborhoods. The results show that optimal locations and prices depend on the extent of wage inequality.
Volume (Year): 36 (2002)
Issue (Month): 2 ()
|Note:||Received: February 2001/Accepted: September 2001|
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