ECN437Congestible Goods

ECN437Congestible Goods - ECN437 CongestibleGoods...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECN437 Congestible Goods Some goods, like highways and national parks, are  nonrival  when few  people are using them but become rival when heavily used. In the middle of  the night, one person's use of a highway has essentially no effect on another  person's ability to use it. During rush hour, however, each additional driver  slows everyone else down. Efficiency requires that we charge little or nothing for the use of congestible  goods when they are uncongested. Otherwise, some people would choose  not to use the good in order to avoid having to pay. That's inefficient  because they are giving up the benefits they would receive from using the  good and (as long as it is uncongested) the marginal cost of letting them  use it is zero. As a concrete example, think of a toll road at night. If the toll is $1,  someone whose marginal benefit from using the road is 50 cents will not 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/05/2012 for the course ECN 437 taught by Professor Peterwilcoxen during the Spring '12 term at Syracuse.

Page1 / 2

ECN437Congestible Goods - ECN437 CongestibleGoods...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online