Nonlinear Pricing on Private Roads with Congestion and Toll Collection Costs
Nonlinear pricing (a form of second-degree price discrimination) is widely used in transportation and other industries but it has been largely overlooked in the road-pricing literature. This paper explores the incentives for a profit-maximizing toll-road operator to adopt some simple nonlinear pricing schemes when there is congestion and collecting tolls is costly. Users are assumed to differ in their demands to use the road. Regardless of the severity of congestion, an access fee is always profitable to implement either as part of a two-part tariff or as an alternative to paying a toll. Use of access fees for profit maximization can increase or decrease welfare relative to usage-only pricing. Hence a ban on access fees could reduce welfare.
|Date of creation:||01 Jan 2010|
|Date of revision:|
|Contact details of provider:|| Postal: 8-14 HM Tory, Edmonton, Alberta, T6G 2H4|
Phone: (780) 492-3406
Fax: (780) 492-3300
Web page: http://www.economics.ualberta.ca/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Eugene Amromin & Carrie Jankowski & Richard D. Porter, 2007.
"Transforming payment choices by doubling fees on the Illinois Tollway,"
Federal Reserve Bank of Chicago, issue Q II, pages 22-47.
- Eugene Amromin & Carrie Jankowski & Richard D. Porter, 2005. "Transforming payment choices by doubling fees on the Illinois Tollway," Conference Series ; [Proceedings], Federal Reserve Bank of Boston.
- Eugene Amromin & Carrie Jankowski & Richard D. Porter, 2006. "Transforming payment choices by doubling fees on the Illinois tollway," Working Paper Series WP-06-16, Federal Reserve Bank of Chicago.
- Arun Sundararajan, 2003. "Nonlinear pricing of information goods," Industrial Organization 0307003, EconWPA.
- Laffont, Jean-Jacques & Tirole, Jean, 1992.
"Access Pricing and Competition,"
IDEI Working Papers
19, Institut d'Économie Industrielle (IDEI), Toulouse.
- Jean-Jacques Laffont & Jean Tirole, 1994. "Access Pricing and Competition," Working papers 94-31, Massachusetts Institute of Technology (MIT), Department of Economics.
- J-J. Laffont & J. Tirole, 1994. "Access Pricing and Competition," Working papers 95-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- De Borger, Bruno, 2001.
"Discrete choice models and optimal two-part tariffs in the presence of externalities: optimal taxation of cars,"
Regional Science and Urban Economics,
Elsevier, vol. 31(4), pages 471-504, July.
- DE BORGER, Bruno, . "Discrete choice models and optimal two-part tariffs in the presence of externalities: Optimal taxation of cars," Working Papers 2000021, University of Antwerp, Faculty of Applied Economics.
- Coyte, Peter C & Lindsey, C Robin, 1988. "Spatial Monopoly and Spatial Monopolistic Competition with Two-Part Pricing," Economica, London School of Economics and Political Science, vol. 55(220), pages 461-77, November.
- Rotaris, Lucia & Danielis, Romeo & Marcucci, Edoardo & Massiani, Jérôme, 2010. "The urban road pricing scheme to curb pollution in Milan, Italy: Description, impacts and preliminary cost-benefit analysis assessment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(5), pages 359-375, June.
- Small, Kenneth A. & Gomez-Ilbanez, Jose A., 1998. "Road Pricing for Congestion Management: The Transition from Theory to Policy," University of California Transportation Center, Working Papers qt8kk909p1, University of California Transportation Center.
- Suzanne Scotchmer, 1985. "Two-Tier Pricing of Shared Facilities in a Free-Entry Equilibrium," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 456-472, Winter.
- Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654 Elsevier.
- Bonsall, Peter & Shires, Jeremy & Maule, John & Matthews, Bryan & Beale, Jo, 2007. "Responses to complex pricing signals: Theory, evidence and implications for road pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(7), pages 672-683, August.
- Teck-Hua Ho & Juanjuan Zhang, 2008. "Designing Pricing Contracts for Boundedly Rational Customers: Does the Framing of the Fixed Fee Matter?," Management Science, INFORMS, vol. 54(4), pages 686-700, April.
- Edelson, Noel M, 1971. "Congestion Tolls Under Monopoly," American Economic Review, American Economic Association, vol. 61(5), pages 873-82, December.
- Armstrong, M. & Doyle, C. & Vickers, J., 1995.
"The access pricing problem: a synthesis,"
Discussion Paper Series In Economics And Econometrics
9532, Economics Division, School of Social Sciences, University of Southampton.
- Mason, Robin, 2000. "Simple competitive Internet pricing," European Economic Review, Elsevier, vol. 44(4-6), pages 1045-1056, May.
- Amihai Glazer & Esko Niskanen, 2000.
"Which Consumers Benefit from Congestion Tolls?,"
216, Government Institute for Economic Research Finland (VATT).
- Glazer, Amihai & Niskanen, Esko, 2000. "Which consumers benefit from congestion tolls?," University of California Transportation Center, Working Papers qt33d88115, University of California Transportation Center.
- Glazer, Amihai & Niskanen, Esko, 2000. "Which consumers benefit from congestion tolls?," University of California Transportation Center, Working Papers qt70v033nx, University of California Transportation Center.
- Nahata, Babu & Ostaszewski, Krzysztof & Sahoo, Prasanna, 1999. "Buffet Pricing," The Journal of Business, University of Chicago Press, vol. 72(2), pages 215-28, April.
- Leeson, Peter T. & Sobel, Russell S., 2008. "Costly price discrimination," Economics Letters, Elsevier, vol. 99(1), pages 206-208, April.
- Skander Essegaier & Sunil Gupta & Z. John Zhang, 2002. "Pricing Access Services," Marketing Science, INFORMS, vol. 21(2), pages 139-159, June.
- Arun Sundararajan, 2004. "Nonlinear Pricing of Information Goods," Management Science, INFORMS, vol. 50(12), pages 1660-1673, December.
- Anja Lambrecht & Katja Seim & Bernd Skiera, 2007. "Does Uncertainty Matter? Consumer Behavior Under Three-Part Tariffs," Marketing Science, INFORMS, vol. 26(5), pages 698-710, 09-10.
- Yew-Kwang Ng & Mendel Weisser, 1974. "Optimal Pricing with a Budget Constraint—The Case of the Two-part Tariff," Review of Economic Studies, Oxford University Press, vol. 41(3), pages 337-345.
- Walter Y. Oi, 1971. "A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly," The Quarterly Journal of Economics, Oxford University Press, vol. 85(1), pages 77-96.
- Scotchmer, Suzanne, 1985. "Profit-maximizing clubs," Journal of Public Economics, Elsevier, vol. 27(1), pages 25-45, June.
- Domon, Koji & Ota, Koshiro, 2001. "Access pricing and market structure," Information Economics and Policy, Elsevier, vol. 13(1), pages 77-93, March.
When requesting a correction, please mention this item's handle: RePEc:ris:albaec:2010_003. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Brenda Carrier)
If references are entirely missing, you can add them using this form.