IDEAS home Printed from https://ideas.repec.org/a/bpj/germec/v19y2018i2p190-208.html
   My bibliography  Save this article

A Discriminatory Mechanism to Reduce Urban Congestion

Author

Listed:
  • Mougeot Michel

    (CRESE, Université de Besançon,Besançon, France)

  • Schwartz Sonia

    (CERDI, Université d’Auvergne,Clermont-Ferrand, France)

Abstract

In this article, we propose an optimal mechanism to reduce congestion when information is asymmetric. Each car driver receives a quantity of traffic rights such that his adjusted marginal benefit is equal to the marginal cost of congestion and payments are based on willingness to pay. We show that the level of congestion achieved is lower and each car user can receive more or fewer rights than under complete information. With symmetric beliefs, the payment rule results from a seconddegree price discrimination. When beliefs are asymmetric, it results simultaneously from a second-degree price discrimination and from a third-degree price discrimination and high willingness-to-pay car users are discriminated against. The revenue raised can be used to reduce distortionary taxes, thereby gaining public acceptability.

Suggested Citation

  • Mougeot Michel & Schwartz Sonia, 2018. "A Discriminatory Mechanism to Reduce Urban Congestion," German Economic Review, De Gruyter, vol. 19(2), pages 190-208, May.
    • Handle: RePEc:bpj:germec:v:19:y:2018:i:2:p:190-208
    DOI: 10.1111/geer.12124
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/geer.12124
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1111/geer.12124?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
    2. Eliasson, Jonas, 2009. "A cost-benefit analysis of the Stockholm congestion charging system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 468-480, May.
    3. Ian W.H. Parry & Roberton C. Williams III & Lawrence H. Goulder, 2002. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 25, pages 471-503, Edward Elgar Publishing.
    4. Cramton, Peter & Kerr, Suzi, 2002. "Tradeable carbon permit auctions: How and why to auction not grandfather," Energy Policy, Elsevier, vol. 30(4), pages 333-345, March.
    5. Mark Bagnoli & Ted Bergstrom, 2006. "Log-concave probability and its applications," Studies in Economic Theory, in: Charalambos D. Aliprantis & Rosa L. Matzkin & Daniel L. McFadden & James C. Moore & Nicholas C. Yann (ed.), Rationality and Equilibrium, pages 217-241, Springer.
    6. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, September.
    7. Ian W. H. Parry & Antonio Bento, 2001. "Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 645-671, December.
    8. MARCHAND, Maurice, 1968. "A note on optimal tolls in an imperfect environment," LIDAM Reprints CORE 22, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Michel Mougeot & Sonia Schwartz, 2008. "Allocation optimale de quotas de pollution et information asymétrique," Revue économique, Presses de Sciences-Po, vol. 59(3), pages 505-515.
    10. Verhoef, Erik T., 2005. "Second-best congestion pricing schemes in the monocentric city," Journal of Urban Economics, Elsevier, vol. 58(3), pages 367-388, November.
    11. Ken Binmore & Paul Klemperer, 2002. "The Biggest Auction Ever: the Sale of the British 3G Telecom Licences," Economic Journal, Royal Economic Society, vol. 112(478), pages 74-96, March.
    12. Arnott, Richard, 2013. "A bathtub model of downtown traffic congestion," Journal of Urban Economics, Elsevier, vol. 76(C), pages 110-121.
    13. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-260, May.
    14. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    15. Gakenheimer, Ralph, 1999. "Urban mobility in the developing world," Transportation Research Part A: Policy and Practice, Elsevier, vol. 33(7-8), pages 671-689.
    16. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 157-183, August.
    17. Richard Arnott & Tilmann Rave & Ronnie Schöb, 2005. "Alleviating Urban Traffic Congestion," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012197, April.
    18. Harrington, Winston & Krupnick, Alan J. & Alberini, Anna, 2001. "Overcoming public aversion to congestion pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(2), pages 87-105, February.
    19. Jonathan Leape, 2006. "The London Congestion Charge," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 157-176, Fall.
    20. F. H. Knight, 1924. "Some Fallacies in the Interpretation of Social Cost," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 38(4), pages 582-606.
    21. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    22. Theodore Tsekeris & Stefan Voß, 2009. "Design and evaluation of road pricing: state-of-the-art and methodological advances," Netnomics, Springer, vol. 10(1), pages 5-52, April.
    23. Kockelman, Kara M. & Kalmanje, Sukumar, 2005. "Credit-based congestion pricing: a policy proposal and the public's response," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(7-9), pages 671-690.
    24. E Verhoef & P Nijkamp & P Rietveld, 1997. "Tradeable Permits: Their Potential in the Regulation of Road Transport Externalities," Environment and Planning B, , vol. 24(4), pages 527-548, August.
    25. Dasgupta, Sudipto & Spulber, Daniel F., 1989. "Managing procurement auctions," Information Economics and Policy, Elsevier, vol. 4(1), pages 5-29.
    26. Charles Raux, 2004. "The Use of Transferable Permits in Transport Policy," Post-Print halshs-00067895, HAL.
    27. repec:bla:scandj:v:103:y:2001:i:4:p:645-71 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Scott Duke Kominers & Alexander Teytelboym & Vincent P Crawford, 2017. "An invitation to market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 541-571.
    2. Timilsina, Govinda R. & Dulal, Hari B., 2008. "Fiscal policy instruments for reducing congestion and atmospheric emissions in the transport sector : a review," Policy Research Working Paper Series 4652, The World Bank.
    3. Kockelman, Kara M. & Lemp, Jason D., 2011. "Anticipating new-highway impacts: Opportunities for welfare analysis and credit-based congestion pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(8), pages 825-838, October.
    4. André de Palma & Robin Lindsey, 2009. "Traffic Congestion Pricing Methods and Technologies," Working Papers hal-00414526, HAL.
    5. Fan, Wenbo & Jiang, Xinguo & Erdogan, Sevgi & Sun, Yanshuo, 2016. "Modeling and evaluating FAIR highway performance and policy options," Transport Policy, Elsevier, vol. 48(C), pages 156-168.
    6. Mahyar Amirgholy & Hojjat Rezaeestakhruie & Hossain Poorzahedy, 2015. "Multi-objective cordon price design to control long run adverse traffic effects in large urban areas," Netnomics, Springer, vol. 16(1), pages 1-52, August.
    7. Tian, Li-Jun & Yang, Hai & Huang, Hai-Jun, 2013. "Tradable credit schemes for managing bottleneck congestion and modal split with heterogeneous users," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 54(C), pages 1-13.
    8. Dogterom, Nico & Ettema, Dick & Dijst, Martin, 2018. "Behavioural effects of a tradable driving credit scheme: Results of an online stated adaptation experiment in the Netherlands," Transportation Research Part A: Policy and Practice, Elsevier, vol. 107(C), pages 52-64.
    9. Button, Kenneth, 2020. "The Transition From Pigou’S Ideas On Road Pricing To Their Application," Journal of the History of Economic Thought, Cambridge University Press, vol. 42(3), pages 417-438, September.
    10. Lindsey, Robin, 2012. "Road pricing and investment," Economics of Transportation, Elsevier, vol. 1(1), pages 49-63.
    11. Siyu Chen & Ravi Seshadri & Carlos Lima Azevedo & Arun P. Akkinepally & Renming Liu & Andrea Araldo & Yu Jiang & Moshe E. Ben-Akiva, 2021. "Market Design for Tradable Mobility Credits," Papers 2101.00669, arXiv.org, revised Sep 2022.
    12. Wada, Kentaro & Akamatsu, Takashi, 2013. "A hybrid implementation mechanism of tradable network permits system which obviates path enumeration: An auction mechanism with day-to-day capacity control," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 60(C), pages 94-112.
    13. Nie, Yu (Marco) & Yin, Yafeng, 2013. "Managing rush hour travel choices with tradable credit scheme," Transportation Research Part B: Methodological, Elsevier, vol. 50(C), pages 1-19.
    14. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    15. Yang, Hai & Wang, Xiaolei, 2011. "Managing network mobility with tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 45(3), pages 580-594, March.
    16. Takayama, Yuki, 2015. "Bottleneck congestion and distribution of work start times: The economics of staggered work hours revisited," Transportation Research Part B: Methodological, Elsevier, vol. 81(P3), pages 830-847.
    17. Ren-Yong Guo & Hai-Jun Huang & Hai Yang, 2019. "Tradable Credit Scheme for Control of Evolutionary Traffic Flows to System Optimum: Model and its Convergence," Networks and Spatial Economics, Springer, vol. 19(3), pages 833-868, September.
    18. Ghafelebashi, Ali & Razaviyayn, Meisam & Dessouky, Maged, 2021. "Congestion Reduction via Personalized Incentives," Institute of Transportation Studies, Working Paper Series qt5b82168n, Institute of Transportation Studies, UC Davis.
    19. Cameron Hepburn, 2006. "Regulation by Prices, Quantities, or Both: A Review of Instrument Choice," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(2), pages 226-247, Summer.
    20. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:germec:v:19:y:2018:i:2:p:190-208. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.