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Journal of Urban Economics
Article . 2017 . Peer-reviewed
License: Elsevier TDM
Data sources: Crossref
SSRN Electronic Journal
Article . 2012 . Peer-reviewed
Data sources: Crossref
EconStor
Research . 2012
Data sources: EconStor
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Cost Recovery of Congested Infrastructure Under Market Power

Authors: Erik T. Verhoef;

Cost Recovery of Congested Infrastructure Under Market Power

Abstract

The Mohring–Harwitz (1962) theorem states that the degree of self-financing of congested infrastructure is equal to the elasticity of the capacity cost function in the optimum, so that under neutral scale economies exact self-financing applies. The theorem breaks down when the infrastructure is used by operators with market power, the case in point often being airlines at a congested airport. This paper proposes a regulatory scheme that restores self-financing in such cases; partially so in general, and perfectly so under specific circumstances that include (1) the satisfaction of a particular proportionality condition, and (2) either the isolation of budgets needed for subsidies to counter demand-related mark-ups, or perfectly elastic demands so that such mark-ups are zero. Moreover, exact self-financing applies in this scheme independent of the elasticity of the capacity cost function, and occurs for both parametric and “manipulable” congestion pricing.

Country
Netherlands
Keywords

R41, Self-financing infrastructure, capacity choice, R48, Monopolistischer Wettbewerb, Congestion pricing, capacity choice, self-financing infrastructure, market power, airport congestion, Bottleneck, Capacity choice, Market power, Airport congestion, SDG 17 - Partnerships for the Goals, Luftverkehrsgesellschaft, self-financing infrastructure, Infrastrukturfinanzierung, Flughafenbau, ddc:330, market power, SDG 11 - Sustainable Cities and Communities, D62, airport congestion, Congestion pricing, Duopol, Theorie, jel: jel:D62, jel: jel:R41, jel: jel:R48

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
8
Average
Average
Average
hybrid