Archive for the ‘Resource’ Category

Congestion Pricing

August 8, 2007

Definition: Congestion pricing is increasing the price on something during peak usage.

Examples:

  • long-distance calls are more expensive during the day
  • airplane tickets are more expensive during the summer
  • in NYC the tolls on certain bridges and tunnels are increased during rush hour
  • in London people who drive their car into town between 7am and 6:30pm are charged a toll of £5

All of these are examples of price responding to demand: when demand for a resource is high, the price goes up, and when it’s low, the price goes down.

The telephone line, the seat on a plane, the bridge, the tunnel, and the road space are “resources”. They are not unlimited. When demand for a limited resource is high, the persons who are willing to pay the most get the resource.

Individuals weigh the cost of using the resource against its benefit. If the cost is too high, they find alternatives (such as calling during a non-peak time, or taking public transportation).

The goal of congestion pricing is to make the costs obvious to people. The hope is that when people are clearly aware of the costs they will make individual decisions that produce a collectively smart result, i.e. congestion is decreased.

— extracted from The Wisdom of Crowds by James Suroweicki

“Resources” – a Fundamental Idea in Economics and the Web

August 5, 2007

Economists talk about resources.  For example, they talk about the demand for a resource, the abundance or scarcity of a resource, allocating resources, the price or value of a resource.

Examples of resources: mahogany wood,  oil, land.

The founding fathers of the web (e.g. Tim Berners-Lee) chose to also use the word “resource”.  On the web anything that can be identified by a URL is a resource.  For example, Google is a resource, identified by http://www.google.com.  A resource that no longer exists is indicated by the error message, 404: Resource Not Found.

Why did Tim Berners-Lee choose to use the word resource?  Did he see a parallel with resources in an economy?  I think the answer is yes.  Consider this: there is demand for web resources, e.g. there is a high demand for the Google resource, and there is a low demand for many other resources.  Web resources have a price or value, as evidenced by the recent purchases of certain web sites.  I am not sure that the web has a parallel concept of abundance or scarcity of a resource, or allocating resources.  (Can you think of a parallel?)

“Resource” seems to be a fundamental idea.