This preview shows page 1. Sign up to view the full content.
Unformatted text preview: or less cars per unit time use the road there is no congestion, yielding a 30 minute travel time between the cities. In addition, each additional car after number 10 adds 2 minutes to everyone's travel time. Road B is wide and bumpy; hence congestion at any relevant use is uncongested, but the travel time between he cities on this road is 40 minutes. a. Give Silberberg's definition of "common property." b. If the two roads are "common property" and 50 cars per unit time use the two roads, how many will be on each road? (We will ignore all costs differences other than time costs. That is, we ignore the possibility that the bumpy road adds to maintenance costs.) c. Will this be a Pareto-optimal solution? Explain. d. Now let Road A be privately owned, and let the owner charge a toll. If time is worth $ 0.5 per minute, what toll will the owner charge? Will this yield a Pareto-optimal solution? Explain....
View Full Document
This note was uploaded on 01/09/2011 for the course ECON 7140 taught by Professor Kutler during the Spring '10 term at Utah Valley University.
- Spring '10