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Optimal pricing of endogenous congestion: a disaggregated approach

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Abstract

We design and estimate a game theoretic congestion pricing mechanism in which the regulator aims at reducing traffic congestion by discriminating travelers according to their willingness to travel on the network. He knows that travelers learn about their environment, that their preferences are affected by the reputation of each available mode of transportation and that congestion can be seen as a Bayesian game in which travelers impose externalities on each other. We derive individual optimal fares depending on each traveler's valuation of transportation. Welfare simulation results based on a French household survey show that the travelers' perception of the mode of transportation and income sensitivity differences are important determinants of welfare improvement.

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  • Christelle Viauroux, 2007. "Optimal pricing of endogenous congestion: a disaggregated approach," UMBC Economics Department Working Papers 09-107, UMBC Department of Economics, revised 17 Jul 2009.
    • Handle: RePEc:umb:econwp:09107
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    More about this item

    Keywords

    regulatory policy; endogenous congestion; incomplete information; reputation effects; welfare simulation;
    All these keywords.

    JEL classification:

    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D6 - Microeconomics - - Welfare Economics

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