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When Are Anonymous Congestion Charges Consistent with Marginal Cost Pricing?

Richard J. Arnott () and Marvin Kraus ()

No 154, NBER Technical Working Papers from National Bureau of Economic Research, Inc

Abstract: There are constraints on pricing congestible facilities. First, if heterogeneous users are observationally indistinguishable, then congestion charges must be anonymous. Second, the time variation of congestion charges may be constrained. Do these constraints undermine the feasibility of marginal cost pricing, and hence the applicability of the first-best theory of congestible facilities? We show that if heterogeneous users behave identically when using the congestible facility and if the time variation of congestion charges is unconstrained, then marginal cost pricing is feasible with anonymous congestion charges. If, however, the time variation of congestion charges is constrained, optimal pricing with anonymous congestion charges entails Ramsey pricing.

JEL-codes: H2 (search for similar items in EconPapers)
Date: 1994-04
Note: PE
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Published as Arnott, Richard and Marvin Kraus. "When Are Anonymous Congestion Charges Consistent With Marginal Cost Pricing?," Journal of Public Economics, 1998, v67(1,Jan), 45-64.

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Journal Article: When are anonymous congestion charges consistent with marginal cost pricing? (1998) Downloads
Working Paper: When are Anonymous Congestion Charges Consistent with Marginal Cost Pricing? (1997)
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