Estimating congestion costs and optimal admission fees: an indexation approach

Rationing the use of fixed capacity facilities subject to congestion costs by using fees is complicated in practice by the difficulty of estimating quality-adjusted demand schedules for the facility. Previous approaches to measuring congestion costs have met with limited success. An alternative methodology based on indexation techniques is presented and then applied to a popular urban lake in Arizona. It is concluded that estimating quality-adjusted user fees through the use of indexation techniques has several advantages over earlier approaches.