PerfectCustomPapers | Surge versus congestion pricing

Surge versus congestion pricing

Compare and contrast surge versus congestion pricing. Provide a specific example of each currently in use.
There are many types of auctions, each with strengths and weaknesses in uncovering the real price/value of an item. Compare and contrast how each of the following uncovers value and provide a specific example of how each uncovers value:
The English auction and the Dutch auction.
The sealed-bid first-price auction and the Vickery Auction.
Auctions are widely used. Analyze an actual auction employed by each of the following:
A state or federal government or an agency of a state or federal government.
A for-profit business.
For each, explain what type of auction is employed and how the auction solves the problem of finding the best price for the good or service.

Sample Answer

Both surge and congestion pricing aim to manage demand and incentivize optimal resource allocation, but they differ in their approaches:

Surge Pricing:

Focus: Raises prices temporarily during peak demand periods.
Goal: Maximize revenue for service providers during high demand times.
Impacts: Can discourage use during peak hours, potentially disproportionately affecting low-income individuals.
Examples: Uber, Lyft (changing ride prices based on demand), Airlines (holiday season price hikes).

Full Answer Section

Congestion Pricing:

Focus:Implements permanent charges for access to congested areas or resources.
Goal:Manage traffic flow and resource use, potentially raising revenue for infrastructure improvements.
Impacts:May lead to reduced congestion, but requires careful design to avoid disproportionately impacting specific groups.
Examples:London congestion zone, Singapore Electronic Road Pricing.

Types of Auctions:

English vs. Dutch:

Uncovering Value:
- English:Value revealed through open bidding, buyers progressively increase bids until highest bidder wins.
- Dutch:Value revealed through decreasing price, seller lowers price until first bidder accepts.
Example:
- English:Antique auction – value starts low, bidding reveals true market value.
- Dutch:eBay auction with automatic price decrease – highest bidder willing to pay the ending price gets the item.

Sealed-Bid vs. Vickery:

Uncovering Value:
- Sealed-Bid 1st Price:Bids submitted privately, highest bid wins, paid price is their own bid.
- Vickery:Bids submitted privately, highest bid wins, paid price is second-highest bid.
Example:
- Sealed-Bid 1st Price:Government contract bidding – encourages low bids but risk of colluding.
- Vickery:Spectrum auction – discourages overbidding, closer to true value.

Real-World Auction Examples:

Government:

Type:Sealed-Bid 1st Price (common).
Problem:Acquire goods & services at best price while ensuring fair competition.
Example:Procurement of military equipment – encourages competitive bids without revealing information.

For-Profit:

Type:English or Dutch (depending on item & goals).
Problem:Sell items quickly and maximize profit.
Example:eBay English auction for collectibles – creates excitement and potential for high bids.
Example:Online Dutch auction for used car – quick sale at acceptable price.

Remember, the choice of auction type depends on specific goals and contexts. Understanding the strengths and weaknesses of each method allows for selecting the most suitable approach for uncovering value and achieving desired outcomes.

This question has been answered.

Get Answer

No More Worries!

Paper Formatting

No Lateness!

Our Guarantees

Surge versus congestion pricing

Sample Answer

Full Answer Section

This question has been answered.

Satisfaction Guaranteed

Why Choose Us