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Abstract

This is the fifth in a series of teaching notes on quality-differentiated demand. With an eye on accessibility to undergraduate economics majors, the focus here is on peak-load pricing and highway tolls. Once quality considerations are accounted for, a richer set of insights is derived to guide social planners in deciding optimal levels of traffic flow and tolls.

JEL Classifications: L0, D0

Keywords

Quality-differentiated demand peak-load pricing

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References

Adams

C. F.

(2020). An undergraduate primer on quality-differentiated demand. The American Economist, 65(2), 277–283. https://doi.org/10.1177/0569434519899354

Adams

C. F.

(2021). Quality-differentiated demand and the analytics of disruption. The American Economist, 66(2), 315–322. https://doi.org/10.1177/0569434520970854

Browning

E.K.

Zupan

M.A.

(2015). Microeconomics: Theory and applications. Wiley.

Pindyck

Rubinfeld

(2018). Microeconomics. Pearson.

Peak-Load Pricing With Quality-Differentiated Demand

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