Hau, T.D. (2005) Economic fundamentals of road pricing: a diagrammatic analysis, Part II - Relaxation of assumptions. Transportmetrica, 1 (2), 119-149.


Abstract:

This is Part II of Hau (2005a, Transportmetica, 1, 81-117) on the diagrammatic analysis of the economic fundamentals of road pricing, in which it assumes that the government aims to maximize welfare of the community by simulating the workings of a competitive industry and pricing highway services at marginal cost. There are a few major assumptions that need to be relaxed: 1) constant value of time, 2) static demand, 3) perfect divisibility, 4) constant returns to scale and 5) variability of road thickness. In this paper, we consider the relaxation of each assumption in turn.