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Too Expensive to Meter: The influence of transaction costs in transportation and communication

Author

Listed:
  • David Levinson

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

  • Andrew Odlyzko

    (Digital Technology Center, University of Minnesota)

Abstract

Technology appears to be making fine-scale charging (as in tolls on roads that depend on time of day or even on current and anticipated levels of congestion) increasingly feasible. And such charging appears to be increasingly desirable, as traffic on roads continues to grow, and costs and public opposition limit new construction. Similar incentives towards fine-scale charging also appear to be operating in communications and other areas, such as electricity usage. Standard economic theory supports such measures, and technology is being developed and deployed to implement them. But their spread is not very rapid, and prospects for the future are uncertain. This paper presents a collection of sketches, some from ancient history, some from current developments, that illustrate the costs that charging imposes. Some of those costs are explicit (in terms of the monetary costs to users, and the costs of implementing the charging mechanisms). Others are implicit, such as the time or the mental processing costs of users. These argue that the case for fine-scale charging is not unambiguous, and that in many cases may be inappropriate.

Suggested Citation

  • David Levinson & Andrew Odlyzko, 2007. "Too Expensive to Meter: The influence of transaction costs in transportation and communication," Working Papers 200802, University of Minnesota: Nexus Research Group, revised Feb 2007.
  • Handle: RePEc:nex:wpaper:tooexpensivetometer
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    File URL: http://hdl.handle.net/11299/179974
    File Function: First version, 2007
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Benjamin Edelman, 2009. "Priced and Unpriced Online Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 21-36, Summer.
    2. Lindsey, Robin, 2011. "State-dependent congestion pricing with reference-dependent preferences," Transportation Research Part B: Methodological, Elsevier, vol. 45(10), pages 1501-1526.
    3. Carnis Laurent, 2014. "The Political Economy of Lighthouses: Some Further Considerations," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 20(2), pages 143-165, December.
    4. Wang, Judith Y.T. & Lindsey, Robin & Yang, Hai, 2011. "Nonlinear pricing on private roads with congestion and toll collection costs," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 9-40, January.
    5. Nikolas Geroliminis & David Levinson, 2008. "Cordon pricing consistent with the physics of overcrowding," Working Papers 000038, University of Minnesota: Nexus Research Group.

    More about this item

    Keywords

    transportation; communication; transaction costs; collection costs;

    JEL classification:

    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
    • N9 - Economic History - - Regional and Urban History
    • H4 - Public Economics - - Publicly Provided Goods

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