PhD Lunch Seminars Amsterdam

Speaker(s)
Martijn B. W. Kobus
Date
2011-06-16
Location
Amsterdam

This paper tests the distortionary effect of congestion on the demand for a local public good, using information about university computers available to students. As is well known, one of the main effects of congestion is that it decreases demand for the public good in a distortionary way. We show however that congestion not only decreases the demand by new users, but it also induces current users of the public good to lengthen their period of good use, so current users increase their demand at peak hours. This behaviour is in line with economic theory when it is acknowledged that current users take into account any expected search costs for gaining future access to the local public good.