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Often enough, social welfare and private benefit do not align for quasi-public goods/services. The inter-basin water transfer (IBWT) project provides a vivid example of this. In this paper, following the game-theoretical approach, we derive an optimal Ramsey pricing scheme to resolve these conflicts. We try to compare traditional supply chain management models with an optimal Ramsey pricing scheme, with an enforcement of coordination among firms. Using simulation techniques, we compute numerical estimates under three regimes: a standard equilibrium decision framework, a coordination decision model and a coordinated Ramsey pricing scheme. Our results show the relative welfare impact of different settings, revealing that the optimal pricing scheme based on the two-part tariff structure cannot only improve social welfare, but also ensure a target profit for participating firms. Lastly, our findings have strong policy implications for the government with profit regulation and the control of water resources.

We consider a standard optimal taxation framework in which consumers' preferences are separable in consumption and labor and identical over consumption, but are affected by consumption externalities. For every nonlinear, income-dependent pricing of goods there is a linear pricing scheme, combined with an adjusted income tax schedule, that leaves all consumers equally well-off and weakly increases the government's budget. The result depends on whether a linear pricing scheme exists that keeps the aggregate amount of consumption at its initial level observed under nonlinear pricing. We provide sufficient conditions for the assumption to hold. If adjusting the income tax rate is not available, personalized prices for an externality can enhance social welfare if they are redistributive, that is, favor consumers with a larger marginal social value of income.

We consider a standard optimal taxation framework in which consumers' preferences are separable in consumption and labor and identical over consumption, but are affected by consumption externalities. For every nonlinear, income-dependent pricing of goods there is a linear pricing scheme, combined with an adjusted income tax schedule, that leaves all consumers equally well-off and weakly increases the government's budget. The result depends on whether a linear pricing scheme exists that keeps the aggregate amount of consumption at its initial level observed under nonlinear pricing. We provide sufficient conditions for the assumption to hold. If adjusting the income tax rate is not available, personalized prices for an externality can enhance social welfare if they are redistributive, that is, favor consumers with a larger marginal social value of income.

By 2050, it is expected that more than 9 billion people will be living on Earth. Development will reach to many places on Earth, demand for a better life will rise, car/vehicle ownership will increase, leading to high demand for road capacities and infrastructures, yet supply for these road capacities and infrastructures is not going to increase in the same rate as their demand. Further, this increase in vehicle ownership will escalate the traffic externalities such as congestion, emission, noise and so on. Due to financial, geographical, and political limitations, and the fact that even the expansion of the existing infrastructure may not lead to efficient use of transportation networks, it is envisaged that road pricing seems a viable option for achieving a more efficient use of the existing infrastructure. With all its potentials, road pricing has not gained all the supports it needed, mainly due to how the pricing schemes are developed and perceived by stakeholders and road users. We developed models for road pricing schemes taking into account the (usually) conflicting interests of various stakeholders and the road users, and all traffic externalities. For a just and acceptable road pricing scheme, we developed a novel idea from the concept of Nash equilibrium from game theory in the form of multi-stakeholder and multi-objective problems. We found that even in simple practical cases, that Nash equilibrium may not exist among the actors. This means that point of consensus might not be reached among stakeholders, an indication why talks on the adoption of road pricing have failed in many countries. To tackle this problem once and for all, we developed a mechanism that ensures that the point of consensus is reached among the stakeholders. The mechanism further ensures that the scheme adopted by these stakeholders is optimal for the society. To further address the issues of fairness and equity, and complications resulting from a link or kilometre-based charges, we developed a zone-based pricing scheme called an origin-destination based road pricing scheme. The scheme ensures efficient use of the road infrastructure by charging road users based on their origin and destination.

This paper investigates transfer pricing as tax avoidance before and after reforms of anti-avoidance legislation. The reforms introduced and tightened obligatory documentation requirements for transfer prices to enforce that multinational enterprises (MNEs) set internal transfer prices at an arm's-length. Linking data from the Microdatabase Statistics on International Trade in Services that comprehends prices of MNEs' international service transactions to the Microdatabase Direct Investment, I create a unique, novel data set to obtain information on whether MNEs' transaction partners are affiliated companies or not. The results provide empirical evidence for tax-motivated transfer pricing during the entire first decade of the 2000s. Interestingly, MNEs target different types of service transactions for profit shifting via transfer pricing depending on the at the time applicable anti-shifting legislation. The findings show transfer pricing legislation to be effective in case of service transactions with observable market values. In contrast, the results clearly reveal the short-comings of transfer pricing legislation in case of intellectual property (IP) where an effective enforcement of the arm's-length principle is very limited as market values are unobservable. Here, the findings suggest the need for a change in tax policy in order to effectively prevent base erosion in case of IP-related transfer pricing.

| openaire: EC/H2020/856602/EU//FINEST TWINS ; Understanding users' attitudes toward national-level road pricing schemes is crucial for successful implementation. Despite the European Union (EU) policy agenda, there is a gap in understanding users' attitudes toward distance-based (DB) and time-based (TB) pricing considering features of pricing technology, willingness to pay, and previous pricing scheme experiences. This gap is especially prominent in the southern and eastern European countries. This research explores factors affecting the maximum acceptable price for DB and TB pricing, as well as users' experience and attitudes, using a case study of North Macedonia. The analysis framework uses statistical modeling of questionnaire data, including structural equation modeling. The findings show that the TB concept is more suitable for daily users, while a DB scheme is more suitable for less frequent motorway users. In addition to use frequency, income and previous experience with pricing technology were the strongest predictors of willingness to pay. The findings provide lessons on the distributive benefits and burdens of DB and TB schemes, as well as their implications for policy learning by considering context-dependent trade-offs between user and policymaker perspectives in medium-income transition European countries. ; Peer reviewed

Lawsuits are still pending, but the current schedule if for a congestion pricing scheme to begin in Manhattan on June 30. An online issue of Vital City published on May 1 has a group of short and readable explainer articles on aspects of the plan. In the opening essay, Josh Greenman lays out the basics … Continue reading Congestion Pricing in Manhattan: About to Arrive?
The post Congestion Pricing in Manhattan: About to Arrive? first appeared on Conversable Economist.

AbstractThis paper examines a duopolistic market in which two firms compete on their positioning and pricing decisions. Consumers may be variety‐seeking or non‐variety‐seeking, and strategic or myopic, in their repeated purchases. The competing firms first determine the positioning and then the prices in two selling periods under either price commitment or dynamic pricing. Contrary to the conventional wisdom that variety‐seeking consumers are less profitable consumers, we find that firms may benefit from more variety‐seeking consumers under either pricing scheme when some of these consumers are myopic. Strategic consumer behavior always intensifies the competition and hurts the firms. Under each pricing scheme, either myopic variety‐seeking consumers or non‐variety‐seeking consumers can be the most profitable consumer group, while strategic variety‐seeking consumers are always the least preferred consumer group. Compared with dynamic pricing, price commitment softens horizontal competition and increases profits. When the firms can choose freely between price commitment and dynamic pricing before they engage in pricing competition, they may adopt asymmetric pricing schemes in equilibrium.

This paper provides a general theoretical framework that captures the essential features of a Swedish reform where private and public health care providers serve patients with certain functional impairments. Because providers receive a fixed hourly compensation for their services (identical across patient types) and only private providers can reject service requests from patients, private providers avoid the costliest patients, resulting in a monetary deficit for public providers. To partially overcome this problem, a multiple pricing (reimbursement) scheme is proposed and its solution is characterized. The results suggest that there are some fundamental trade-offs, e.g., between the goals of containing costs and restricting choices for patients, but that the suggested pricing scheme may substantially reduce the deficits for public providers without affecting the total budget set by the central government.