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

David Levinson and Andrew Odlyzko
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Andrew Odlyzko: Digital Technology Center, University of Minnesota

No 200802, Working Papers from University of Minnesota: Nexus Research Group

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.

Keywords: transportation; communication; transaction costs; collection costs (search for similar items in EconPapers)
JEL-codes: H4 L91 L96 N7 N9 R40 R41 R48 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2007-02, Revised 2007-02
New Economics Papers: this item is included in nep-net and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in Philosophical Transactions of the Royal Society A: Mathematical Physical and Engineering Sciences 366(1872) pp 2033Ð2046, doi:10.1098/rsta.2008.0022

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http://hdl.handle.net/11299/179974 First version, 2007 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:nex:wpaper:tooexpensivetometer

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