marginal cost pricing
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Author(s):  
Paolo Delle Site

For networks with human-driven vehicles (HDVs) only, pricing with arc-specific tolls has been proposed to achieve minimization of travel times in a decentralized way. However, the policy is hardly feasible from a technical viewpoint without connectivity. Therefore, for networks with mixed traffic of HDVs and connected and autonomous vehicles (CAVs), this paper considers pricing in a scenario where only CAVs are charged. In contrast to HDVs, CAVs can be managed as individual vehicles or as a fleet. In the latter case, CAVs can be routed to minimize the travel time of the fleet of CAVs or that of the entire fleet of HDVs and CAVs. We have a selfish user behavior in the first case, a private monopolist behavior in the second, a social planner behavior in the third. Pricing achieves in a decentralized way the social planner optimum. Tolls are not unique and can take both positive and negative values. Marginal cost pricing is one solution. The valid toll set is provided, and tolls are then computed according to two schemes: one with positive tolls only and minimum toll expenditure, and one with both tolls and subsidies and zero net expenditure. Convergent algorithms are used for the mixed-behavior equilibrium (simplicial decomposition algorithm) and toll determination (cutting plane algorithm). The computational experience with three networks: a two-arc network representative of the classic town bypass case, the Nguyen-Dupuis network, and the Anaheim network, provides useful policy insight.


2020 ◽  
Vol 52 (S1) ◽  
pp. 245-269
Author(s):  
Guillaume Yon

The article studies the development of the long-term marginal cost pricing of electricity in France, in the 1950s and 1960s. The engineers who managed the public monopoly for the production, transport, and distribution of electricity promoted a distinctive version of the economics and engineering nexus. Costs calculations were developed to design a nationwide integrated machine. Hydropower in the south was to be interconnected with thermal power in the north, in order to support a massive increase in consumption in the Paris basin, saving on coal and on the scarce funding of the Marshall Plan. Prices acted as administrative instructions, passing on costs to subscribers and shaping their present and future behavior according to the planned development of the system. This was a technocratic intervention: the engineer-economists made crucial and lasting decisions on land-use planning for the sake of the rapid growth of the system. This engineering and economics nexus was a far cry from the prewar liberal order made of multiple small and loosely regulated competitors, and from contemporary forms of economic engineering, more narrowly focused on the informational properties of prices, abandoning the calculated nationwide decisions on the growth of processes of production and uses. It is also slightly neglected in the discussion over the so-called indicative planning in postwar France.


2020 ◽  
Vol 35 (2) ◽  
pp. 181-203 ◽  
Author(s):  
Alain Marciano

The purpose of this article analyze the process that led Buchanan to become a ‘Wicksellian’, that is, to recognise the importance of Finanztheoretische Untersuchungen. It is now established that Buchanan discovered Wicksell’s Finanztheoretische Untersuchungen not after he had completed his PhD dissertation – as he himself recounted – but before. We show that, if the process did indeed start with the dissertation, Wicksell remained marginal for Buchanan until he had read Nancy Ruggles’s articles on welfare economics and marginal cost pricing. This led him to start translating Wicksell’s book. Then, we discuss the role of the correspondence that Buchanan exchanged with Carl Uhr. Ruggles and Uhr played an important role in Buchanan’s acceptance that Finanztheoretische Untersuchungen was an important book.


Energy ◽  
2019 ◽  
Vol 189 ◽  
pp. 116367 ◽  
Author(s):  
Wen Liu ◽  
Diederik Klip ◽  
William Zappa ◽  
Sytse Jelles ◽  
Gert Jan Kramer ◽  
...  

Author(s):  
Surender Kumar

The chapter aims to review the state of water and sanitation facilities in Indian cities, and policy interventions undertaken to address inadequacies in the provision of these services. The power-law relationship reveals that greater autonomy in management helps in realizing economies of scale. The chapter also measures technical and scale efficiency in the provision of these services in Indian cities. Estimates of technical efficiency uncover that water and sanitation service providers have the potential to increase service levels by 37 and 48 per cent respectively. Note that most Indian urban water and sanitation utilities are operating at decreasing returns to scale. This implies that services may be charged following the rule of marginal cost pricing. The chapter also finds that there are consumption-metering advantages in improving efficiency of water utilities.


2019 ◽  
Vol 7 (7) ◽  
pp. 287-296
Author(s):  
Li-Hsing Ho ◽  
Alang Manglavan ◽  
Chung-Cheng Fu

The model for updating marginal cost pricing by overall equipment effectiveness (OEE) indexes as well as P*A*Q under existing market tough competition. Motivation/Background: When production capacity is constant and the AC curve is higher than the MC curve, AC pricing can be employed. Because of market competition, businesses producing in small quantities and low diversity use MC pricing. To reduce the risk to profit, a novel cost pricing mechanism can be adopted by using the unit DC of MC to correspond to the OEE under Areeda-Turner Rule. Method: The correspondence of the OEE with the unit direct cost (DC) is deduced and verified in this paper by calculating the quotient found by dividing the OEE indexes by unit DC as conditional as Bill of Material (BOM) cost. Results: Research findings revealed a positive alert for timely updating pricing between average cost (AC) pricing and marginal cost (MC) pricing. Conclusions: This approach reflects the dynamic game in a timely manner. The OEE comprises the performance, availability, and quality indexes. These three indexes reconcile the unit DC pricing, and using MC in optimization of marginal revenue (MR). In practice, shop floor management measures key indexes of idleness and loss; the objective is to eliminate laggard and static pricing problem. This realizes dynamic examination of cost difference of the BOM cost pool. One case study is employed to explain the MC pricing strategy in industry.


2019 ◽  
Vol 2019 ◽  
pp. 1-10 ◽  
Author(s):  
Ge Gao ◽  
Xinmin Liu ◽  
Huijun Sun ◽  
Jianjun Wu ◽  
Haiqing Liu ◽  
...  

This paper tries to explore a more applicable tradable credit scheme for managing network mobility from the angle of marginal cost pricing. The classic mathematical model-Cobweb model is used to analyze the stability of credit price. It is found that credit price is not always convergent in the trading market. It will show convergence, divergence, two-period simple behaviors, and even more complex dynamic behaviors, such as cycle movements and chaos. Considering the applicability and public goods character of tradable credits scheme, one public pricing mechanism- marginal cost pricing is explored. Analytical investigations and the numerical simulation of a particular case with linear demand and supply indicate that marginal cost pricing is an effective, sustainable, and socially feasible manner in managing the demand for car travel.


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