Nonlinear Pricing on Private Roads with Congestion and Toll Collection Costs

Charles Lindsey (), Judith Wang and Hai Yang
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Judith Wang: University of Alberta, Department of Economics

No 2010-3, Working Papers from University of Alberta, Department of Economics

Abstract: Nonlinear pricing (a form of second-degree price discrimination) is widely used in transportation and other industries but it has been largely overlooked in the road-pricing literature. This paper explores the incentives for a profit-maximizing toll-road operator to adopt some simple nonlinear pricing schemes when there is congestion and collecting tolls is costly. Users are assumed to differ in their demands to use the road. Regardless of the severity of congestion, an access fee is always profitable to implement either as part of a two-part tariff or as an alternative to paying a toll. Use of access fees for profit maximization can increase or decrease welfare relative to usage-only pricing. Hence a ban on access fees could reduce welfare.

Keywords: congestion pricing; two-part pricing; private roads; toll collection costs (search for similar items in EconPapers)
JEL-codes: D42 R41 (search for similar items in EconPapers)
Pages: 70 pages
Date: 2010-01-01
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Nonlinear pricing on private roads with congestion and toll collection costs (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2010_003

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