Congestion with heterogeneous commuters |
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Authors: | Yonghong An Zhixiang Zhang |
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Institution: | 1. Department of Economics, University of Connecticut, Storrs, CT 06269, USA;2. CEMA, Central University of Finance and Economics, Beijing, 100081, China |
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Abstract: | We study a congestion model where a continuum of heterogeneous commuters make a binary choice between riding a bus and driving private vehicles for their commutes. Formulating the model as a large game, we establish the existence and uniqueness of a nontrivial Nash equilibrium and analyze how a gasoline tax affects the allocation of commuters between public transportation and private vehicles at the equilibrium. Based on the analysis, we provide a sufficient condition under which a gasoline tax is Pareto improving. We also prove the existence of a socially optimal policy that minimizes the aggregate loss to all commuters. |
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Keywords: | L92 R48 |
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