Department of Economics
University of Delaware
Working Paper #2009-08
The Deterministic Bottleneck Model with Non-Atomistic Traffic
Joseph I. DanielABSTRACT
This paper investigates the conditions under which dominant airlines internalize self-imposed delays in a deterministic bottleneck model of airport congestion, complementing Brueckner and Van Dender's (2008) similar analysis for the standard congestion-pricing model. A unified model of congestion tolling includes untolled, uniform-, coarse-, multi-step, and fine-toll equilibria as specific cases. It provides a rigorous theoretical foundation for Daniel's (1995, 2008) empirical findings that dominant airlines often ignore self-imposed delays, by modeling three motivations for atomistic behavior: preempting potential entry by additional fringe aircraft; occupying higher valued service periods; and displacing actual fringe entrants that have more dispersed operating-time preferences. In each case, atomistic behavior generates queues that deter fringe operations. Unlike Daniel’s stochastic bottleneck model, this deterministic model provides explicit closed-form solutions for optimal tolls. Dominant and fringe tolls generally differ by constant amounts (if at all) rather than varying in inverse proportion to market share as in Brueckner and Van Dender's model.
JEL Codes: R4, H2, L5, L9
Keywords: Airport Congestion, Slot Constraints, Pricing, Bottleneck, Queuing