A Pareto‐improving hybrid policy for transportation networks

This paper investigates an innovative Pareto‐improving hybrid policy that combines two policy instruments, that is, congestion pricing and road space rationing, and takes advantage of the synergistic effects between these instruments. Mathematical formulations for developing Pareto‐improving pure road space rationing schemes and hybrid policies are presented. Numerical examples demonstrate that the proposed hybrid policy offers greater flexibility and is more prominent in leading to Pareto improvement than both pure congestion pricing and road space rationing schemes. Copyright © 2013 John Wiley & Sons, Ltd.     

Pareto-improving transportation network design and ownership regimes

Private provision of public roads signifies co-existence of free, public-tolled and private-tolled roads. This paper investigates the Pareto-improving transportation network design problem under various ownership regimes by allowing joint choice of road pricing and capacity enhancement on free links. The problem of interest is formulated as a bi-objective mathematical programming model that considers the travel cost of road users in each origin-destination pair and the investment return of the whole network. The non-dominated Pareto-improving solutions of toll and/or capacity enhancement schemes are sought for achieving a win-win situation. A sufficient condition is provided for the existence of the non-dominated Pareto-improving schemes and then the properties of those schemes are analyzed. It is found that, under some mild assumptions, the optimal capacity enhancement is uniquely determined by the link flow under any non-dominated Pareto-improving scheme. As a result, the joint road pricing and capacity enhancement problem reduces to a bi-objective second-best road pricing problem. A revenue distribution mechanism with return rate guarantee is proposed to implement the non-dominated Pareto-improving schemes.     

Pareto-improving congestion pricing and revenue refunding with multiple user classes

This study investigates Pareto-improving congestion pricing and revenue refunding schemes in general transportation networks, which make every road user better off as compared with the situation without congestion pricing. We consider user heterogeneity in value of time (VOT) by adopting a multiclass user model with fixed origin–destination (OD) demands. We first prove that an OD and class-based Pareto-improving refunding scheme exists if and only if the total system monetary travel disutility is reduced. In view of the practical difficulty in identifying individual user’s VOT, we further investigate class-anonymous refunding schemes that give the same amount of refund to all user classes traveling between the same OD pair regardless of their VOTs. We establish a sufficient condition for the existence of such OD-specific but class-anonymous Pareto-improving refunding schemes, which needs information only on the average toll paid and average travel time for trips between each OD pair.     

Rationing and pricing strategies for congestion mitigation: Behavioral theory,econometric model,and application in Beijing

Some travel demand management policies such as road pricing have been widely studied in literature. Rationing policies, including vehicle ownership quota and vehicle usage restrictions, have been implemented in several megaregions to address congestion and other negative transportation externalities, but not well explored in literature. Other strategies such as Vehicle Mileage Fee have not been well accepted by policy makers, but attract growing research interest. As policy makers face an increasing number of policy tools, a theoretical framework is needed to analyze these policies and provide a direct comparison of their welfare implications such as efficiency and equity. However, such a comprehensive framework does not exist in literature. To bridge this gap, this study develops an analytical framework for analyzing and comparing travel demand management policies, which consists of a mathematical model of joint household vehicle ownership and usage decisions and welfare analysis methods based on compensating variation and consumer surplus. Under the assumptions of homogenous users and single time period, this study finds that vehicle usage rationing performs better when relatively small percentages of users (i.e. low rationing ratio) are rationed off the roads and when induced demand elasticity resulting from congestion mitigation is low. When the amount of induced demand exceeds a certain level, it is shown analytically that vehicle usage restrictions will always cause welfare losses. When the policy goal is to reduce vehicle travel by a fixed portion, road pricing provides a larger welfare gain. The performance of different policies is influenced by network congestion and congestibility. This paper further generalizes the model to consider heterogenous users and demonstrates how it can be applied for policy analysis on a real network after careful calibration.     

Advanced pricing and rationing policies for large scale multimodal networks

The applying of simplified schemes, such as cordon pricing, as second-best solution to the toll network design problem is investigated here in the context of multiclass traffic assignment on multimodal networks. To this end a suitable equilibrium model has been developed, together with an efficient algorithm capable of simulating large scale networks in quite reasonable computer time. This model implements the theoretical framework proposed in a previous work on the toll optimization problem, where the validity of marginal cost pricing for the context at hand is stated. Application of the model to the real case of Rome shows us, not only that on multimodal networks a relevant share (up to 20%) of the maximum improvements in terms of social welfare achievable with marginal cost pricing can in fact be obtained through cordon pricing, but also that in practical terms rationing is a valid alternative to pricing, thus getting around some of the relevant questions (theoretical, technical, social) the latter raises. As a result we propose a practical method to analyze advanced pricing and rationing policies differentiated for user categories, which enables us to compare alternative operative solutions with an upper bound on social welfare based on a solid theoretical background.     

Congestion pricing and roadspace rationing: an application to the San Francisco Bay Bridge corridor

This paper presents an empirical application of a congestion–alleviation strategy that C. Daganzo [Transportation Research B 29 (1995) 139–154] proposed as a “hybrid between rationing and pricing”. This strategy is applied to the San Francisco Bay Bridge corridor, in search of a practical and Pareto-improving solution to the Bridge's congestion. The work relies on a mode-split model for work trips across four different income groups residing in 459 origin zones, and it applies an equilibrium analysis based on Bridge performance. Results indicate that modal utilities (and thus choices) are sensitive to the specific combination of toll and rationing rate, as well as to the Bridge's travel-time (or performance) function, and the length of the congested section. Though no combination of tolls plus rationing rates was found to benefit all groups of travelers studied, further investigations may improve upon these results by refining some of the assumptions made here.     

The reciprocal relationship between policy debate and media coverage: The case of road pricing policy in the Netherlands

This study examined the changes in the media coverage of two road pricing schemes proposed in the Netherlands in the period 1998–2010, as well as the link between the media coverage and the policy debate. Both pricing proposals were debated for several years and neither was introduced. Our findings show that space allocation for type of overall tone (e.g. negative or positive towards a pricing proposal) and the range of issues and policy actors in the media coverage were very different for the two proposals, and for each proposal fluctuated greatly over time. Our analysis suggests that such a variation in the media coverage was a reflection of changes in the content of the policy debate (e.g. caused by the specific design features of pricing proposal under discussion, the different policy actors engaged in the debate and their messages about the proposal). This indicates that policymakers can influence the media coverage of road pricing policies to some extent by managing the policy debate. Our findings also show not only that changes in the content of the policy debate were reflected in the media coverage, but also that the media coverage influenced the policy debate: the statements or actions of policy actors received media coverage, which then in turn stimulated the policy debate. However, the influence of media on the policy debate was rather indirect, in that policy actors mostly reacted to the messages from other policy actors reported in the media and to a lesser extent to the media coverage itself.     

Road Pricing models with maintenance cost

According to the Federal Highway Administration of the United States, maintenance expenditure takes up more than 25% of road revenue disbursement and this percentage has been increasing gradually. The reason for the increment in maintenance cost is that there lacks incentives for road users to take this cost component into their driving behavior. That is, different classes of vehicles should be levied different levels of congestion tax due to the different degrees of damage on the highway if a road pricing policy is implemented. This paper intends to incorporate this concept into road pricing literature by introducing two types of vehicles. After the analysis of the problem, we find that different types of vehicles should be charged different tolls. The toll includes not only the travel delay cost of one's own vehicle and the other types of vehicles, but also the marginal maintenance cost that is dependent on the traffic flow. A set of numerical examples is provided to demonstrate the theoretical analyses. The result shows that both the welfare and cost coverage rate will increase when the road pricing mechanism takes the maintenance cost factor into account.     

The acceptability of road pricing in Vienna: the preference patterns of car drivers

The acceptability of road pricing has attracted considerable attention among researchers over the last decade, as is evident in the amount of literature about transport and environmental economics. The general conclusion from these studies has been that there is low acceptability for road pricing among car users. In this paper, we add more knowledge to the existing literature by conducting an acceptability study of road pricing in Vienna, where such a study has never been conducted before. We used a replication study approach where a previous approach used in the EU research project AFFORD (acceptability of fiscal and financial measures and organisational requirements for demand management) was replicated for Vienna and further supplemented with a conjoint analysis. In order to examining whether the Vienna study confirms previous findings. We investigated the acceptability of two concrete policy packages factors influencing this acceptability, and preference patterns that can be used in designing a road pricing policy for Vienna. The survey reveals a higher acceptability if road pricing schemes lead to perceived personal benefits. According to the multivariate analyses, the “personal outcome expectations”, “social norm” and “perceived effectiveness” variables account for more than 50 % of the criterion variance and therefore these are the most influential factors. Road pricing schemes can be an effective transport management instrument for a city particularly if they are associated with direct investment in public transport and public infrastructure. Thus, personal benefits can be perceived more easily and direct effects can be expected.     

Existence of self-financing and Pareto-improving congestion pricing: Impact of value of time distribution

This paper considers a static congestion pricing model in which travelers select a mode from either, driving on highway or taking public transit, to minimize a combination of travel time, operating cost and toll. The focus is to examine how travelers’ value of time (VOT), which is continuously distributed in a population, affects the existence of a pricing-refunding scheme that is both self-financing (i.e. requiring no external subsidy) and Pareto-improving (i.e. reducing system travel time while making nobody worse off). A condition that insures the existence of a self-financing and Pareto-improving (SFPI) toll scheme is derived. Our derivation reveals that the toll authority can select a proper SFPI scheme to distribute the benefits from congestion pricing through a credit-based pricing scheme. Under mild assumptions, we prove that an SFPI toll always exists for concave VOT functions, of which the linear function corresponding to the uniform distribution is a special case. Existence conditions are also established for a class of rational functions. These results can be used to analyze more realistic VOT distributions such as log-normal distribution. A useful implication of our analysis is that the existence of an SFPI scheme is not guaranteed for general functional forms. Thus, external subsidies may be required to ensure Pareto-improving, even if policy-makers are willing to return all toll revenues to road users.     

Optimization of tunnel tolls in land use and transport planning

The task of transport planning is to determine cost-effective methods of providing and improving mobility, which can include minimizing traffic congestion. A cost-effective solution to transport problems should consist of a land use pattern, a transport system an a set of road pricing policies that together bring demand and supply into balance in an efficient and equitable way. The conventional approach aimed to produce comprehensive, long-term plans for land use and transport in considerable detail, but tended to ignore the role of road pricing policy, thus ending up with solutions that might not be efficient or economical. This feature of sub-optimal road pricing policy is accentuated by the overall growth in car use, which has generated problems with the efficient use of road space. This paper presents a computer analysis system (or model) which will enable the analysis of coordinated tunnel toll pricing policies by optimising an “objective function” while satisfying the associated and other constraints. The possibility of integrating the optimal road pricing policies in the land use and transport planning are discussed. A case study based on Hong Kong data demonstrates the efficiency of optimizing tolls on two of the three harbour crossing tunnels in Hong Kong.     

Achieving political acceptability for new transport infrastructure in congested urban regions

This paper analyzes the efficiency and political acceptability of road pricing and infrastructure policies targeted at relieving urban congestion. It combines a stylized transport model of an urban road network with a model of the political process that incorporates interactions between voters, citizen interest groups and politicians to explore the possibilities to reach political acceptability for efficient transport policies. In a numerical illustration, the paper compares a set of pricing and investment policies in terms of efficiency and acceptability. The illustration shows how conflicting interests can lead to non-efficient policies being chosen.     

Morning commute problem considering route choice, user heterogeneity and alternative system optima

This paper extends the bottleneck model to study congestion behavior of morning commute and its implications to transportation economics. The proposed model considers simultaneous route and departure time choices of heterogenous users who are distinguished by their valuation of travel time and punctual arrival. Moreover, two dynamic system optima are considered: one minimizes system cost in the unit of monetary value (i.e., the conventional system optimum, or SO) and the other minimizes system cost in the unit of travel time (i.e., the time-based SO, or TSO). Analytical solutions of no-toll equilibrium, SO and TSO are provided and the welfare effects of the corresponding dynamic congestion pricing options are examined, with and without route choice. The analyses suggest that TSO provides a Pareto-improving solution to the social inequity issue associated with SO. Although a TSO toll is generally discriminatory, anonymous TSO tolls do exist under certain circumstances. Unlike in the case with homogenous users, an SO toll generally alters users’ route choices by tolling the poorer users off the more desirable road, which worsens social inequity. Numerical examples are presented to verify analytical results.     

The Smeed Report 50 years on: a role for the workplace parking levy?

Fifty years ago, Reuben Smeed chaired a study and produced a Report on the Economic and Technical Possibilities of Road Pricing. This report was to consider different methods of charging, including road pricing, to see if different pricing methods could reduce the problems associated with congestion as opposed to the traditional methods in place such as fuel tax. Since that time, various attempts have been made to introduce road pricing schemes but with only modest success so far. By contrast parking policies, a second-best alternative to road pricing, have been extensively used by local authorities as a means of managing congestion. The effectiveness of such policies, however, has been limited by an increase in the proportion of privately owned non-residential parking which is not under the control of local authorities. The aim of this paper is to present the results of an early-stage, post-implementation study of the Nottingham Workplace Parking Levy (WPL) – a measure that charges employers for the number of parking spaces they provide for their staff. Particular emphasis is placed on why a WPL was seen as being favourable compared to a road pricing alternative. The reason for this was that it could be introduced in a shorter time frame and at a lower cost, thus making it a lower risk option when compared with road pricing.     

Envisioning an emission diet: application of travel demand mechanisms to facilitate policy decision making

Emission reduction strategies are gaining attention as planning agencies work towards adherence to air quality conformity standards. Policymakers struggling to reduce greenhouse gases (GHG) must grapple with a growing number of travel demand policies. To consider any of these emerging demand mechanisms as a viable option to meet emission targets, planners and policymakers need tools to better understand the implications of such policies on travel behavior. In this paper we present an integrated multimodal travel demand and emission model of four policy strategies; presenting GHG and air pollutant reduction results at a very detailed level. Multiple policy outcomes are compared within a single modeling framework and study area. The results reveal that while no one demand mechanism is likely to reduce emissions to a level that meets policy-maker’s goals; a first-best pricing strategy that incorporates marginal social costs is the most effective emission reduction mechanism. Implementing such a mechanism may offer total emission reductions of up to 24 %. However, the efficacy of this strategy must be weighed against difficulties of establishing efficient pricing, a costly implementation, and substantial negative impacts to non-highway facilities. Decision makers must select a mixture of pricing and land use strategies to achieve emission goals on all road facilities.     

Time-dependent area-based pricing for multimodal systems with heterogeneous users in an agent-based environment

In this paper, we investigate an area-based pricing scheme for congested multimodal urban networks with the consideration of user heterogeneity. We propose a time-dependent pricing scheme where the tolls are iteratively adjusted through a Proportional–Integral type feedback controller, based on the level of vehicular traffic congestion and traveler’s behavioral adaptation to the cost of pricing. The level of congestion is described at the network level by a Macroscopic Fundamental Diagram, which has been recently applied to develop network-level traffic management strategies. Within this dynamic congestion pricing scheme, we differentiate two groups of users with respect to their value-of-time (which related to income levels). We then integrate incentives, such as improving public transport services or return part of the toll to some users, to motivate mode shift and increase the efficiency of pricing and to attain equitable savings for all users. A case study of a medium size network is carried out using an agent-based simulator. The developed pricing scheme demonstrates high efficiency in congestion reduction. Comparing to pricing schemes that utilize similar control mechanisms in literature which do not treat the adaptivity of users, the proposed pricing scheme shows higher flexibility in toll adjustment and a smooth behavioral stabilization in long-term operation. Significant differences in behavioral responses are found between the two user groups, highlighting the importance of equity treatment in the design of congestion pricing schemes. By integrating incentive programs for public transport using the collected toll revenue, more efficient pricing strategies can be developed where savings in travel time outweigh the cost of pricing, achieving substantial welfare gain.     

Spatial impacts of road pricing: Accessibility, regional spillovers and territorial cohesion

Road pricing policies are gaining prominence in EU countries. These policies have positive impacts leading to mobility patterns which are socially and environmentally more desirable, but they also have negative impacts. One negative impact is to be found in regional accessibility, due to the increase in generalized transport costs. This study presents a methodology based on accessibility indicators and GIS to assess the accessibility impacts of a road pricing policy. The methodology was tested for the Spain’s road network considering two road pricing scenarios. It enables not only the more penalized regions to be identified but also negative road pricing spillover effects between regions. These effects are measured in terms of accessibility changes occurring in one region produced by charges implemented in another region. Finally, the study of accessibility disparities (by calculating inequality indexes for each of the scenarios considered), provides policymakers with useful information regarding the impact of road pricing policies from the point of view of territorial cohesion.     

Pricing road use: politico-economic and fairness considerations

Road pricing measures are rarely adopted in practice. In this review, we ask why citizens are not more supportive of road pricing. We identify two difficulties. First, the general public is often unwilling to embrace the price system as an allocation mechanism for scarce resources. Second, for politico-economic reasons, any latent support for road pricing schemes rarely translates into actual policy-making. Based on our analysis, we outline components of a road pricing policy that might receive greater electoral support.     

Road pricing for congestion control with unknown demand and cost functions

It is widely recognized that precise estimation of road tolls for various pricing schemes requires a few pieces of information such as origin–destination demand functions, link travel time functions and users’ valuations of travel time savings, which are, however, not all readily available in practice. To circumvent this difficulty, we develop a convergent trial-and-error implementation method for a particular pricing scheme for effective congestion control when both the link travel time functions and demand functions are unknown. The congestion control problem of interest is also known as the traffic restraint and road pricing problem, which aims at finding a set of effective link toll patterns to reduce link flows to below a desirable target level. For the generalized traffic equilibrium problem formulated as variational inequalities, we propose an iterative two-stage approach with a self-adaptive step size to update the link toll pattern based on the observed link flows and given flow restraint levels. Link travel time and demand functions and users’ value of time are not needed. The convergence of the iterative toll adjustment algorithm is established theoretically and demonstrated on a set of numerical examples.     

Road pricing — an outsider's view of American experiences

Abstract

Substantial changes in urban transport policy have taken place over the past decade. The concern with expanding infrastructure and the preoccupation with providing sufficient road capacity to meet the increasing demand of unrestricted car use, which characterized transport policy in the 1950s and 1960s, has gradually given way to the idea that there is a need to restrain motor traffic if urban society is to function efficiently. A variety of restrictive physical traffic management, land use planning and economic policies have, in consequence, been pursued. One option which has attracted considerable attention in the academic literature, but which has been received more cooly by policy‐makers, is the possibility of optimizing urban traffic congestion through the imposition of road pricing. The introduction and relative success of the area licensing scheme in Singapore has added fuel to the arguments of the advocates of such a policy. This review is not directly concerned with either the experiment with road pricing in Singapore nor the theoretical debates which have taken place concerning the potential merits and defects of such policies but rather looks at the applied work in the United States which has looked into the practical implications of road pricing for its cities. Further, it seeks to explore, again drawing on American experiences, just why there has been so much opposition to the employment of economic pricing principles in the urban road transport market. The author presents the results of an SSRC sponsored study into the practical problems of introducing road pricing to cities in the United States.