Bottleneck Congestion with Elastic Demand

Richard Arnott, André de Palma () and Charles Lindsey ()

Working Paper from Economics Department, Queen's University

Abstract: This paper models congestable facilities subject to peak-load demand. It argues that a properly-specified model should explicitly treat the congestion technology and consumer's time-of-use decision. The standard model can be interpreted as a reduced form of such a model if the peak period is treated as a single interval, but not if it is divided into sub-intervals. The paper illustrates this, by extending Vickrey's model of bottleneck congestion, treating elastic demand and solving for optimal capacity under several pricing regimes.

Pages: 40 pages
Date: 1987
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:690

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