Uniform versus peak-load pricing of a bottleneck with elastic demand
Ralph M. Braid
Abstract
Ralph M. Braid
Abstract
This paper considers commuting to work across a bottleneck such as a bridge or tunnel, with elastic demand. With no toll, there is wasteful queueing. The optimal peak-load toll eliminates queueing and leaves total traffic unchanged. The second-best uniform toll cannot eliminate queueing, but reduces total traffic. The second-best uniform toll may be larger or smaller than the maximum value of the optimal peak-load toll.
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This paper considers commuting to work across a bottleneck such as a bridge or tunnel, with elastic demand. With no toll, there is wasteful queueing. The optimal peak-load toll eliminates queueing and leaves total traffic unchanged. The second-best uniform toll cannot eliminate queueing, but reduces total traffic. The second-best uniform toll may be larger or smaller than the maximum value of the optimal peak-load toll.
Key concepts: Toll, Bottleneck, Queueing theory, Bridge (graph theory), Mathematical optimization, Computer science, Economics, Mathematics