Lunch Seminar Economics (LSE) - 2021/2022
Interviene: Achim Czerny, Hong Kong Polytechnic University
Title: Congestion Management in the Presence of High and Low Time-valuation Users: Prices Versus Permits Under Uncertainty
Authors: A.Czerny
Abstract: Congestion problems are common in transport markets including road, air and sea transport. They are typically caused by limited infrastructure supply relative to demand. This study sheds light on the relative welfare performance of pricing and permit congestion policies when market conditions vary over time. The model features a congested infrastructure facility and, importantly, two types of passengers called business and leisure passengers. The former exhibit a high time valuation and a low price-elasticity of demand relative to the latter, which is a common set of assumptions in, for example, aviation studies. The results demonstrate the importance of distinguishing passenger types and identifying the various sources for market variations for the assessment of congestion policies.