A direct redistribution model of congestion pricing

doi:10.1016/S0191-2615(00)00003-5

Transportation Research Part B: Methodological

Volume 35, Issue 5, June 2001, Pages 447-460

https://doi.org/10.1016/S0191-2615(00)00003-5 Get rights and content

Abstract

This paper discusses a direct redistribution approach to congestion pricing in which monies collected from drivers on a more desirable route are directly transferred to users on a less desirable route. An analytical model for a two-node two-route network is developed. An example is used to demonstrate the applicability of this model. It is shown that this model of toll collection and subsidization will reduce the travel cost for all travelers and totally eliminate the waiting time in the queue. When compared against the social optimal assignment, the direct redistribution model yields almost identical results.

Introduction

In recent years congestion pricing has gained popularity as a method for managing peak-period congestion. If roadway users are forced to pay a toll that reflects the marginal cost that they impose on others, some, if not many, users may opt to modify their travel behavior. Several types of changes are possible, including taking a different route, traveling at a different time, switching modes, and chaining trips (Harvey, 1994). Under ideal circumstances, congestion toll should be variable and computed in real-time based on the prevailing level of roadway congestion. The toll rate needs to be updated in real-time to reflect the actual marginal cost of each additional user. Although computing congestion tolls in real-time is possible from the technical aspect, having continuously changing tolls is not quite practical. Instead a step toll technique which is based on the historic magnitude of the traffic demand can be used. This suggests high toll rates during the peak periods and incrementally lower tolls during the off peak hours.

With instrumented networks and electronic toll collection systems (ETC) it is now theoretically possible to implement near real-time congestion pricing systems. Presently, there are selected congestion pricing systems in place, such as SR 91 in Orange county California and I-15 in San Diego. Other field tests have been conducted in several other urban areas across America including San Francisco–Oakland Bay Bridge, Boulder Colorado, and Minneapolis–St. Paul Minnesota. These implementations are focusing on the levy of tolls, some variable, to meter highway congestion.

While real-time congestion pricing is theoretically easy to implement, it has long been viewed as a political issue (Giuliano, 1992). In particular, the redistribution of toll revenues is an issue that influences public opinion of congestion pricing (Urban Transportation Monitor, 1997). The support for congestion pricing is much higher if the public believes that revenues are used for specific rather than general transportation purposes, including the maintenance of the priced facilities or public transport improvements within the priced transportation corridor. Several researchers discuss ways to use toll revenues Goodwin, 1989, Small, 1992, Rom, 1994, Giuliano, 1994. They include capacity improvement, highway maintenance, investment in transit systems, reduction in road user taxes, direct cash payments to travelers, and reduction in general taxation. Giuliano (1994) discusses fairness and equity issues of congestion pricing. She states that while there are potential benefits to congestion pricing, any redistribution of toll revenues would have to directly account for systematic differences in travel behavior across gender and household characteristics. Van Vuren and Smart (1990) and El Sanhouri and Bernstein (1994) suggest that the integration of traveler information systems and congestion pricing will improve public perception.

Litman (1996) states that while conventional thinking suggests that revenues must be dedicated to transportation improvements to be politically feasible, there are indications that alternative distributions, such as tax reductions or financial rebates, benefit the largest number of citizens and therefore may be more politically popular. He argues that congestion pricing must be both politically acceptable and revenues must be used in a manner that is economically efficient. However, he does not specifically propose a single manner for redistributing toll revenues.

Some researchers have proposed the use of subsidies as a way to fairly distribute toll revenues. DeCorla-Souza (1994) proposed a cashing out strategy. He reports that future public highway infrastructure costs to serve peak period travelers ranges from 12.5 to 19.8 cents per peak period vehicle mile of travel (VMT), while user taxes and tolls average only 2.0 cents per VMT. There is a subsidy to peak period travelers amounting to 10–18 cents per VMT. This subsidy is similar to parking subsidies, and could theoretically be “cashed out”, i.e. funding proposed to provide infrastructure for “free” peak period travel could theoretically be offered in cash to would-be peak period drivers as an inducement to shift to other modes, thus reducing the need for additional infrastructure.

Bernstein (1993) proposed a time-based variable pricing scheme that includes both congestion tolls and subsidies on the same route. Commuters that arrive at the destination close to the desired arrival time pay a toll while those that arrive very late or early receive a subsidy. The total toll revenue is divided evenly among all commuters to ensure that the total revenue collected is equal to the total subsidies paid. Using a route and departure-time choice equilibrium model of a simple network, Bernstein demonstrated that this scheme could reduce the equilibrium cost. He also states that this approach will correct the distributional impacts of congestion pricing and eliminate the need for the government to redistribute the toll revenues. This model assumes that all routes in a network are congested over the same time interval. Tolling is time-based, not route-based.

In this paper, a direct redistribution approach to congestion pricing is proposed. The notion is to impose congestion tolls on a congested route and distribute the revenues to the users of an alternative route. Toll revenues are distributed among system users across facilities. The next section describes the modeling framework for a simple two-node two-route network. An example is presented that demonstrates the model for three levels of demand. A short discussion on how such a system may be implemented follows. The paper concludes with a discussion on the problem and further research that is planned.

Section snippets

Modeling framework

Several different models have been employed over the years to study travel costs. Vickrey (1969) formulated a model of network flow in which roads are modeled as bottlenecks. He suggested that the total cost of a trip could be modeled as a linear combination of travel time and schedule delay costs. The assumption he made is that commuters can trade off travel time against schedule delay costs, travelers have the options to select both a route and a departure time to minimize their total travel

Example with a test network

The model formulation derived in the previous section is tested with a set of data for a two-node two-route network. The data, shown in Table 1, were randomly conceived except for the values of α and β, which are commonly used in the literature. To find the optimal trips on Route 1 and Route 2, N^C1 and N^C2 must be solved for. N^C1=2Δs₁=1333. From N^C1 to N^C2 route usage is found by (10). And N^C2 can be easily found by substituting the values of Table 1 into (12). $N^{C2} =2 D Δ s_{1} s_{2} + Δ^{2} s_{1} +s_{2}^{2} =4830.$ Beyond N^C

Discussion

Several researchers have proposed time-sensitive tolls and subsidies to meter capacity and spread peak-period demand. This paper investigates a new twist to the problem, that is collecting tolls and redistributing revenues across several paths that service the same origin–destination pair. The motivation for the research is to explore opportunities for invoking congestion pricing in a manner that will better satisfy the public's desires to use toll revenues in a constructive manner. The

Conclusions

Congestion pricing is advocated both by economists and members of the transportation community as an effective tool for alleviating traffic congestion. It provides a mechanism for spreading peak period demand over time, space, and possibly mode. Still, there are many opposed to the notion of congestion pricing. In particular, equity and fairness issues are of major concern to much of the public. Congestion pricing is seen by many as serving only the interests of high-income individuals who can

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A direct redistribution model of congestion pricing

Abstract

Introduction

Section snippets

Modeling framework

Example with a test network

Discussion

Conclusions

Journal of Urban Economics

Transportation Research B

Estimation of travel choice models with randomly distributed values of time

Transportation Research Record

Applying the cashing out approach to congestion pricing

Transportation Research Record

Integrating driver information systems with facility-based congestion pricing

Transportation Research Record

An assessment of the political acceptability of congestion pricing

Transportation