Pricing and Valuation of Transport Facilities in the Presence of Congestion

A brief survey of the problem of congestion costs in transport pricing and valuation shows there is need for explicit treatment along with the implications of congestion for short-run comparative static results and for investment decisions in transport capacity. This paper attempts to expand the treatment of transport congestion in these directions within the context of traditional microeconomic theory, paying particular attention to the impact of congestion on the magnitude of the consumers' surplus generated by a single imperfectly competitive transport mode. The conventional (uncongested) short-run comparative static responses of price and quantity in the presence of an unambiguous shift in the demand for services should be treated with caution when congestion is present. Optimal changes in price and quantity may occur in opposite directions

Business · Economics · Microeconomics · Natural resource economics · Valuation (finance) · Economic theories and models · Finance · Fiscal Policy and Economic Growth · Transportation Planning and Optimization

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