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Congestion at Locks on Inland Waterways: An Experimental Testbed of a Policy of Tradable Priority Permits for Lock Access

Cook, Joseph P. and Plott, Charles R. (2005) Congestion at Locks on Inland Waterways: An Experimental Testbed of a Policy of Tradable Priority Permits for Lock Access. Social Science Working Paper, 1240. California Institute of Technology , Pasadena, CA. (Unpublished)

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This research is focused on the problem of congestion at locks on the inland waterways of the United States, and particularly on the Mississippi and Illinois Rivers. The current policy of first-come-first-served exacerbates the problem and adds to delays and inefficiency. An alternative policy of marketable priority access permits is proposed and studied. The dimensions of the policy relative to the needs of operators are discussed. Well established economic theory suggests that the system of marketable priority permits will increase the economic efficiency with which locks operate and that by the endowing of current operators with these permits will increase their profitability. A testbed experiment was conducted to illustrate how the principles operate. The policy objective of increased efficiency is observed thereby establishing proof of principle. More importantly, the policy works according to all of the many predictions that theory holds thereby establishing design consistency. Not only is the value of system use increased, prices converge to the competitive levels, the removal of delay for certain classes of permits transforms system use to higher valued activities and operator profitability is increased. In the testbed, the policy produces the desired outcomes and it does so for understandable reasons.

Item Type:Report or Paper (Working Paper)
Additional Information:The support of this research provided by the U.S. Corps of Engineers, CDM, the California Institute of Technology Laboratory for Experimental Economics and Political Science, and National Economics Research Associates is gratefully acknowledged. Helpful comments were provided by many, including Keith Hofseth, Donald Sweeny, Gloria Appell, Travis Maron, Hsing Yang Lee, David Schwartz, Cagatay Koc, Mark Isaac, Doug Davis, and participants at the session of the annual meetings of the Southern Economic Association at which this paper was presented. However, the views, opinion and/or findings contained in this report are those of the author(s) and should not be construed as an official Department of the Army position, policy or decision unless so designated by other official documentation.
Group:Social Science Working Papers
Funding AgencyGrant Number
Army Corps of EngineersUNSPECIFIED
Caltech Social Science Experimental LaboratoryUNSPECIFIED
National Economics Research AssociatesUNSPECIFIED
Series Name:Social Science Working Paper
Issue or Number:1240
Record Number:CaltechAUTHORS:20170802-115222530
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79767
Deposited By: Hanna Storlie
Deposited On:02 Aug 2017 20:13
Last Modified:03 Oct 2019 18:23

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