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

Abstract

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.

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