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Bottleneck Congestion with Elastic Demand

Author

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  • Richard Arnott
  • Andre de Palma
  • Robin Lindsey

Abstract

This paper models congestable facilities subject to peak-load demand. It argues that a properly-specified model should explicitly treat the congestion technology and consumer's time-of-use decision. The standard model can be interpreted as a reduced form of such a model if the peak period is treated as a single interval, but not if it is divided into sub-intervals. The paper illustrates this, by extending Vickrey's model of bottleneck congestion, treating elastic demand and solving for optimal capacity under several pricing regimes.

Suggested Citation

  • Richard Arnott & Andre de Palma & Robin Lindsey, 1987. "Bottleneck Congestion with Elastic Demand," Working Papers 690, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:690
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    Cited by:

    1. Yang, Hai & Hai-Jun, Huang, 1997. "Analysis of the time-varying pricing of a bottleneck with elastic demand using optimal control theory," Transportation Research Part B: Methodological, Elsevier, vol. 31(6), pages 425-440, November.
    2. Hugo Emilio Silva & Robin Lindsey & André de Palma & Vincent A.C. van den Berg, 2014. "On the Existence and Uniqueness of Equilibrium in the Bottleneck Model with Atomic Users," Tinbergen Institute Discussion Papers 14-077/VIII, Tinbergen Institute.
    3. Arnott, Richard & Kraus, Marvin, 1993. "The Ramsey problem for congestible facilities," Journal of Public Economics, Elsevier, vol. 50(3), pages 371-396, March.
    4. Lindsey, Robin, 2012. "Road pricing and investment," Economics of Transportation, Elsevier, vol. 1(1), pages 49-63.

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