The Optimal Function of Congestion in a Paris Metro Pricing Model

17 Pages Posted: 19 Aug 2004

Date Written: June 2002

Abstract

In this paper we show that the Paris Metro Pricing of Odlyzko (1997) can be solution of a maximization problem of the social welfare when the aversion of the consumers to the congestion is her/his private information. The solution obtained is rather robust insofar as there is no systematic divergence between the optimal function of congestion and that of first rank (in complete information) and where the solution appears not very sensitive to the weighting used (represented by the opportunity cost of the public funds). Thus a private monopolist would implement a scheme giving results in term of congestion rates by types of users rather close to that which would choose a benevolent regulator.

Keywords: Congestion, Internet Service Providers, Principal Agent

JEL Classification: L12, L13

Suggested Citation

de Marin de Montmarin, Maxime, The Optimal Function of Congestion in a Paris Metro Pricing Model (June 2002). Available at SSRN: https://ssrn.com/abstract=578085 or http://dx.doi.org/10.2139/ssrn.578085

Maxime De Marin de Montmarin (Contact Author)

Universities of Marseille ( email )

Marseille Cedex 07
France

G.R.E.Q.A.M-L.E.Q.AM

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France

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