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

  • David Levinson

    ()

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

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
Download Restriction: no

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
Contact details of provider: 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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  1. 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.
  2. 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.
  3. David Levinson, 1999. "Tolling at a Frontier: A Game Theoretic Analysis," Working Papers 199904, University of Minnesota: Nexus Research Group.
  4. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1990. "Economics of a bottleneck," Journal of Urban Economics, Elsevier, vol. 27(1), pages 111-130, January.
  5. Arnott, R. & De Palma, A. & Lindseyt, R., 1995. "Recent Developments in the Bottleneck Model," Papers 9523, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
  6. C. Robin Lindsey & Erik T. Verhoef, 2000. "Traffic Congestion and Congestion Pricing," Tinbergen Institute Discussion Papers 00-101/3, Tinbergen Institute.
  7. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
  8. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, June.
  9. David Levinson, 2000. "Revenue Choice on a Serial Network," Working Papers 200001, University of Minnesota: Nexus Research Group.
  10. C. Robin Lindsey & Erik T. Verhoef, 2000. "Traffic Congestion and Congestion Pricing," Tinbergen Institute Discussion Papers 00-101/3, Tinbergen Institute.
  11. 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.
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