WHEN ARE ANONYMOUS CONGESTION CHARGES CONSISTENT WITH MARGINAL COST PRICING

There are constraints on pricing congestible facilities. First, if het erogeneous users are observationally indistinguishable, then congestio n charges must be anonymous. Second, the time variation of congestion charges may be constrained. Do these constraints undermine the feasibi lity of marginal cost pricing, and hence the applicability of the firs t-best theory of congestible facilities? For an important class of con gestible facilities, we show that if heterogeneous users behave identi cally when using the facility and if the time variation of congestion charges is unconstrained, then marginal cost pricing is feasible with anonymous congestion charges. If, however, the time variation of conge stion charges is constrained, optimal pricing with anonymous congestio n charges entails Ramsey pricing. (C) 1998 Elsevier Science S.A.