Micro-foundations of congestion and pricing: A game theory perspective

David Levinson

Transportation Research Part A: Policy and Practice, 2005, vol. 39, issue 7-9, 691-704

Abstract: This paper develops congestion theory and congestion pricing theory from its micro-foundations, the interaction of two or more vehicles. Using game theory, with a two-player game it is shown that the emergence of congestion depends on the players' relative valuations of early arrival, late arrival, and journey delay. Congestion pricing can be used as a cooperation mechanism to minimize total costs (if returned to the players). The analysis is then extended to the case of the three-player game, which illustrates congestion as a negative externality imposed on players who do not themselves contribute to it.

Date: 2005
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Working Paper: Micro-foundations of Congestion and Pricing: A Game Theory Perspective (2005)
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