Congestion, Tolls, and the Economic Capacity of a Waterway

One externality which has received little attention from economists is that connected with congestion (a recent treatment is Strotz, 1965). An increase in the utilization of a facility can result in longer waiting time or in a less appealing service. For example, an increased number of tows on a water- way can give rise to greater delays at locks; a larger crowd at a beach can lead to a lower satisfaction for each "customer." The former case, which involves production, is particularly complex. Here, delay is caused either by the random arrival of customers or by a random service (production) rate. Serving tows at a lock is analogous to serving shoppers at a super- market checkout stand. Similar problems occur with respect to allocating docking facilities in a port, runways and terminals in an airport, land to streets in an industrial park, and machines in a job shop