DOCSLIB.ORG

Finance, Taxation, Pricing, Economic Analysis, Socioeconomics

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Finance, Taxation, Pricing, Economic Analysis, Socioeconomics 122 TRANSPORTATION RESEARCH RECORD 1395 Understanding the Competing Short-Run Objectives of Peak Period Road Pricing DAVID BERNSTEIN AND JEROME MULLER The interest in peak period road pricing has grown considerably 1993 or 1994 and a full-scale program by 1997 (14); and Oslo in recent years both in the United States and abroad. This increase and Trondheim, Norway, and Stockholm and Gothenberg, in interest is usually attributed to worsening congestion and im­ Sweden, are all considering programs of one kind or another. proved electronic toll collection technologies. However, there may be a third reason as well: peak period pricing can be used Several reasons are usually given for this renewed interest. to generate revenues. This use of peak period road pricing is First, congestion is now much worse than it has ever been in explored and compared with programs that are designed to min­ the past. As two-income families have become more prevalent imize social cost. Using some simple examples, it is shown that and suburban rings have grown in both absolute population it is possible to increase toll revenues but at a significant cost to and area, the number of commuters using private automobiles society. In addition, it is shown that most of the revenues and in the United States has increased dramatically. In fact, from costs can be attributed to the length and end of the toll period. 1960 to 1980 the number of people driving to work nearly doubled (at a time when the number of people in the work Peak period pricing has been an accepted part of life in the force increased by only 50 percent). In addition, there has United States for many years. For example, most long dis­ been a continued increase in the amount of truck transport, tance telephone companies charge higher prices during the and hence in highway truck miles, both inside and outside of day than they do during the evening and night. In addition, urban areas. The result is that more than 55 percent of urban many public transit systems (e.g., the Washington, D.C., freeway travel during the peak period takes place during con­ Metro) also charge higher prices during the peak period. gested conditions (15) and that more than 11 percent of the However, in spite of the urgings of many economists, peak total vehicle miles of travel takes place during recurring period pricing is not yet in widespread use on U.S. highways. congestion (16). Hence, although congestion pricing has been There are, of course, many reasons for this. In the United unpopular in the past, it is needed more than ever before. States, some of these reasons became evident during the 1970s Second, toll collection technology [see for example, Bernstein when UMTA, with the help of the Urban Institute, offered and Kanaan (17)] has now advanced to the point where to assist several cities in establishing programs that would congestion pricing can be implemented. demonstrate that peak period pricing could be used to bring However, in our casual conversations with policy makers congestion levels down to the "socially optimal" level (which who are now considering peak period pricing, it has become is a specific type of peak period pricing that is usually referred apparent that there is another reason for this increase in in­ to as "congestion pricing"). The response was considerably terest. Many of them seem to view peak period pricing as a less than expected (1,2). Although three cities did agree to mechanism for increasing revenues (which should not, strictly further study (Madison, Berkeley, and Honolulu), all of the speaking, be referred to as congestion pricing). In addition, preliminary studies ended without requests for further funding there ma.y also be increased support for road pricing simply because of public opposition. Congestion pricing was per­ as a means of reclaiming road space for pedestrians [see Good­ ceived as being unfafr, discriminatory, regressive, coercive, win (18) ]. and antibusiness. Not surprisingly, the existing literature does not consider Yet, in spite of these past failures, the United States and these aspects of peak period road pricing. Instead, it focuses other countries are again beginning to consider peak period on the inefficiencies that are inherent in (high-volume) road­ road pricing. In the United States, the recent Intermodal way travel (19-28). Thus, given the possibility that peak pe­ Surface Transportation Efficiency Act (!STEA) has allocated riod road pricing may be used as a revenue generation mech­ funding for up to five pilot congestion pricing programs. In anism, it is important to consider the impacts of such policies. the rest of the world, several such programs are now either This paper represents a first step in such an investigation. under way or in the planning stages. For example, Singapore We begin by describing the specific setting we consider has had a program in place since 1975 (3-6); Bergen, Norway, throughout the remainder of the paper and by discussing the has had a program in place since 1986; and Hong Kong tested various competing objectives of peak period road pricing. We a program from 1983 to 1985 and is now considering a full­ then consider the impacts of pursuing these objectives, first scale implementation (7-12). The Netherlands had planned within the context of tolls that are in place throughout the on having a full-scale program in place by 1996 and is now entire peak period and then within the context of time-varying considering a somewhat scaled-down program instead (13); tolls. We conclude with a discussion of future avenues that Cambridge, England, intends to initiate a trial program by still need to be pursued. We should point out in advance that we do not evaluate any specific road pricing programs in this Massachusetts Institute of Technology, Cambridge, Mass. 02139. paper. Studies of this kind can be found elsewhere (29-32). Bernstein and Muller 123 COMPETING OBJECTIVES by rP(t), and each possible pattern of departures is described by the vectors r(t) = (rp(t) : p E P) and r = (r(t) : t E Road pricing can have several effects on traveler behavior in [O, T]). The total number of commuters between the single the short run. In particular, it can result in changes in route, 0-D pair is denoted by N. Thus, the set of feasible path flow changes in departure time, changes in mode, changes in the vectors is given by total number of trips taken, and changes in the origin and destinations of those trips. As a result, it can be used to achieve a variety of different ends. (It is for this reason that H = {r: L lT rP(t)dt = N} (1) pEP 0 we generally often use the term peak period road pricing rather than congestion pricing in this paper. We use the latter term only to describe programs that are designed to increase The cost on each path ( CP) is a function of the total travel social welfare.) For example, one can imagine policy makers time on the path and the arrival time at the destination (plus making well-reasoned arguments about why road pricing should any tolls). We assume that the time needed to traverse path be used to p when entered at time t can be modeled as a deterministic queueing process in which •Reduce social costs (time, money, etc.), • Reduce out-of-pocket transportation costs, (2) •Reduce travel time, • Reduce the number of vehicle miles, where • Increase toll revenues, •Increase transit revenues, or (fixed) travel time on path p, • Increase total (toll and transit) revenues. service rate of the queue on path p, and number of vehicles in the queue on path p for a vehicle that enters the path at time t Furthermore, these objectives could be either general (e.g., (and hence reaches the queue at time reduce the total number of vehicle miles or reduce out-of­ pocket transportation costs) or very specific (e.g., reduce the t + dp). total number of vehicle-miles on the Gotham Expressway or Further, because travelers may arrive early or late, we intro­ reduce out-of-pocket transportation costs for people earning duce an asymmetric schedule cost given by less than $20,000/year). In general, the various objectives of road pricing need not 13[t* - (t + Dp(t))] if[t+Dp(t)]<t* conflict, yet in some cases they may be entirely contradictory. <l>p(t) = 0 p ( (3) { if [ t + D t)] = t * For example, it may be possible to both increase toll revenues -y[(t + Dp(t)) - t*] if [t + Dp(t)] > t* and reduce social costs. On the other hand, it may not be possible to both reduce out-of-pocket transportation costs and where increase total revenues. In either case, it is important that we have some way of comparing these different objectives so that t* desired arrival time, policy makers can make informed decisions. 13 dollar penalty associated with early arrival, and For the purposes of this paper, we will use a relatively -y dollar penalty associated with late arrival. simple technique to conduct the comparison. In particular, Note that we do not include a window of "equally acceptable" we will consider only two different types of policies, one aimed arrival times to simplify the analysis that follows. Also note at minimizing social cost (which in the examples that follow that we will often use the notation F,, to denote the free-flow is simply the total travel cost minus the toll revenue) and the travel cost on path p (i.e., F,, = adP). other aimed at maximizing toll revenues (given certain con­ Using the preceding definitions, we may now define the straints).
Load more

Recommended publications
  • Chapter 5 Conclusions and General Recommendations
    Conclusions and general recommendations Chapter 5 Chapter 5 Conclusions and general recommendations Economic Instruments have a long history – both in developed and developing countries. Transport has always been used to generate state revenues. Many instruments that have been discussed in this book, in fact, can be found in various forms of horse ownership charges, and road and bridge tolls in many countries’ economic histories. Many of these roots, however, have been neglected and forgotten in the recent debate about sustainable transport policy. By 1776, Adam Smith, in “The Wealth of Nations,” had already outlined the basic principles of a sound transport policy. These included most of the aforementioned principles and recommendations for taxation and financing schemes.1 Economic Instruments thus are not new transport policy “tools.” But these tools have too long been idle. It is time to relearn their use, and to use them wisely in order to meet the economic, social and ecological challenges that occur today. 1 An excellent modern outline of the principles formulated by Adam Smith can be found in Metschies 2001. 117 Chapter 5 Conclusions and general recommendations Eight basic insights In the face of diminishing public budgets but increasing internal and toward a wise use of external costs of infrastructure and environmental damage a rethinking Economic of transport policy is needed. In this rethinking, Economic Instruments Instruments. should play an important role. The existing experience with the use of Economic Instruments, as presented in this book, lead to a number of conclusions. These can be summarised as follows: 1. There is a diverse toolbox of Economic Instruments that can be used to address economic, ecological and social goals with tailor-made measures based on economic incentives.
    [Show full text]
  • The Marginal Cost of Traffic Congestion and Road Pricing: Evidence from a Natural Experiment in Beijing
    The Marginal Cost of Traffic Congestion and Road Pricing: Evidence from a Natural Experiment in Beijing Shanjun Li Avralt-Od Purevjav Jun Yang1 Preliminary and Comments Welcome December 2016 ABSTRACT Leveraging a natural experiment and big data, this study examines road pricing, the first-best policy to address traffic congestion in Beijing. Based on fine-scale traffic data from over 1500 monitoring stations throughout the city, this paper provides the first empirical estimate of the marginal external cost of traffic congestion (MECC) and optimal congestion charges based on the causal effect of traffic density on speed, a key input for measuring the MECC. The identification of the causal effect relies on the plausibly exogenous variation in traffic density induced by the driving restriction policy. Our analysis shows that the MECC during rush hours is about 92 cents (or $0.15) per km on average, nearly three times as much as what OLS regressions would imply and larger than estimates from transportation engineering models. The optimal congestion charges range from 5 to 38 cents per km depending on time and location. Road pricing would increase traffic speed by 10 percent within the city center and lead to a welfare gain of 1.4 billion and revenue of 40 billion Yuan per year. Keywords: Traffic Congestion, Road Pricing, Natural Experiment JEL Classification: H23, R41, R48 1 Shanjun Li is an Associate Professor in the Dyson School of Applied Economics and Management, Cornell University, [email protected]; Avralt-Od Purevjav is a doctoral student in the Dyson School of Applied Economics and Management, Cornell University, [email protected]; Jun Yang is a research fellow in Beijing Transportation Research Center, [email protected].
    [Show full text]
  • Glossary of Regional Transportation Systems Management and Operations Terms
    TRANSPORTATION RESEARCH Number E-C166 August 2012 Glossary of Regional Transportation Systems Management and Operations Terms Second Edition TRANSPORTATION RESEARCH BOARD 2012 EXECUTIVE COMMITTEE OFFICERS Chair: Sandra Rosenbloom, Professor of Planning, University of Arizona, Tucson Division Chair for NRC Oversight: C. Michael Walton, Ernest H. Cockrell Centennial Chair in Engineering, University of Texas, Austin Executive Director: Robert E. Skinner, Jr., Transportation Research Board Vice Chair: Deborah H. Butler, Executive Vice President, Planning, and CIO, Norfolk Southern Corporation, Norfolk, Virginia TRANSPORTATION RESEARCH BOARD 2012–2013 TECHNICAL ACTIVITIES COUNCIL Chair: Katherine F. Turnbull, Executive Associate Director, Texas Transportation Institute, Texas A&M University, College Station Technical Activities Director: Mark R. Norman, Transportation Research Board Paul Carlson, Research Engineer, Texas Transportation Institute, Texas A&M University, College Station, Operations and Maintenance Group Chair Thomas J. Kazmierowski, Manager, Materials Engineering and Research Office, Ontario Ministry of Transportation, Toronto, Canada, Design and Construction Group Chair Ronald R. Knipling, Principal, safetyforthelonghaul.com, Arlington, Virginia, System Users Group Chair Mark S. Kross, Consultant, Jefferson City, Missouri, Planning and Environment Group Chair Peter B. Mandle, Director, LeighFisher, Inc., Burlingame, California, Aviation Group Chair Harold R. (Skip) Paul, Director, Louisiana Transportation Research Center, Louisiana
    [Show full text]
  • Congestion Pricing and the Economics of Managing Traffic Robert Krol
    Tolling the Freeway: Congestion Pricing and the Economics of Managing Traffic Robert Krol MERCATUS RESEARCH Robert Krol. “Tolling the Freeway: Congestion Pricing and the Economics of Managing Traffic.” Mercatus Research, Mercatus Center at George Mason University, Arlington, VA, May 2016. ABSTRACT Highway congestion increases the cost of travel in most urban areas in the United States. This paper examines the economics of highway congestion pric- ing. Toll-free highways can be congested at certain times of the day. When addi- tional drivers entering the freeway slow traffic, they impose an externality, or cost, on other highway users. A congestion toll that varies with the level of traf- fic can correct that congestion externality. The evidence indicates that conges- tion tolls reduce congestion and increase driving speeds. Some policymakers are concerned that congestion taxes are regressive. Many factors, such as the proximity of residential communities to jobs, can influence this outcome. Also, the way toll revenues are used determines the degree to which the tax is regres- sive or progressive. Research suggests that congestion tolls are no more regres- sive than the fuel tax that is currently used to finance highways. To encourage and facilitate the adoption of congestion pricing in the United States, Congress should pass legislation making congestion tolls legal on all interstate highways. Experience with congestion tolling improves the public’s perception of tolling and increases drivers’ willingness to accept highway tolls. One tactic that has been successful is following a congestion-pricing experiment with a referen- dum on whether the system should be made permanent. JEL codes: H21, H22, L91, 018, R41, R48 Keywords: congestion externalities, peak-load pricing, tax incidence, tax regressivity Copyright © 2016 by Robert Krol and the Mercatus Center at George Mason University Release: May 2016 The opinions expressed in Mercatus Research are the authors’ and do not represent official positions of the Mercatus Center or George Mason University.
    [Show full text]
  • Dynamic, Stochastic Models for Congestion Pricing and Congestion Securities
    Dynamic, Stochastic Models for Congestion Pricing and Congestion Securities FINAL REPORT December 31, 2010 By Terry L. Friesz and Tao Yao Technical Report Documentation Page 1. Report No. 2. Government Accession No. 3. Recipient’s Catalog No. PSU-2009-01 4. Title and Subtitle 5. Report Date December 31, 2010 Dynamic, Stochastic Models for Congestion Pricing and Congestion Securities 6. Performing Organization Code 7. Author(s) 8. Performing Organization Report LTI 2011-17 Terry L. Friesz, Tao Yao 9. Performing Organization Name and Address 10. Work Unit No. (TRAIS) The Thomas D. Larson Pennsylvania Transportation Institute 11. Contract or Grant No. The Pennsylvania State University DTRT07-G-0003 201 Transportation Research Building University Park, PA, 16802-4710 12. Sponsoring Agency Name and Address 13. Type of Report and Period Covered US Department of Transportation Final Report 1/1/2010-12/31/2010 Research & Innovative Technology Administration 14. Sponsoring Agency Code UTC Program, RDT-30 1200 New Jersey Ave., SE Washington, DC 20590 15. Supplementary Notes 16. Abstract This research considers congestion pricing under demand uncertainty. In particular, a robust optimization (RO) approach is applied to optimal congestion pricing problems under user equilibrium. A mathematical model is developed and an analysis performed to consider robust, dynamic user equilibrium, optimal tolls based on the second-best problem known as the dynamic optimal toll problem with equilibrium constraints, or DOTPEC. Finally, numerical experiments and qualitative analyses are conducted to investigate the performance and robustness of the solutions obtained. 17. Key Words 18. Distribution Statement Robust Optimization, Dynamic Congestion Pricing, Dynamic User Equilibrium 19.
    [Show full text]
  • Congestion Pricing Sep Ash 6 Pst.NW 328- T Em in G 500 T B on E R 2006 0 Www , DC 200 .R
    September 2006 RFF DP 06-37 Congestion Pricing Long-Term Economic and Land-Use Effects Elena Safirova, Sébastien Houde, D. Abram Lipman, Winston Harrington, and Andrew Baglino 1616 P St. NW Washington, DC 20036 202-328-5000 www.rff.org DISCUSSION PAPER Congestion Pricing: Long-Term Economic and Land-Use Effects Elena Safirova, Sébastien Houde, D. Abram Lipman, Winston Harrington, and Andrew Baglino Abstract We employ a spatially disaggregated general equilibrium model of a regional economy that incorporates decisions of residents, firms, and developers integrated with a spatially disaggregated strategic transportation planning (START) model that features mode, time period, and route choice to evaluate economic effects of congestion pricing. First, we evaluate the long-run effects of a road-pricing policy based on the integrated model of land use, strategic transport, and regional economy (LUSTRE) and compare them with the short-term effects obtained from the START model alone. We then look at distributional effects of the policy in question and point out differences and similarities in the short run versus the long run. Finally, we analyze the mechanisms at the source of the economic and land-use effects induced by the road-pricing policy. Key Words: traffic congestion, welfare analysis, CGE modeling, cordon tolls, distributional effects JEL Classification Numbers: C68, D63, R13, R14, R41 © 2006 Resources for the Future. All rights reserved. No portion of this paper may be reproduced without permission of the authors. Discussion papers are research materials circulated by their authors for purposes of information and discussion. They have not necessarily undergone formal peer review. Contents Introduction............................................................................................................................
    [Show full text]
  • Reducing Urban Road Transportation Externalities: Road Pricing in Theory and in Practice Downloaded from Alex Anas* and Robin Lindseyy
    66 Symposium: Transportation and the Environment Reducing Urban Road Transportation Externalities: Road Pricing in Theory and in Practice Downloaded from Alex Anas* and Robin Lindseyy Introduction http://reep.oxfordjournals.org/ Urban road transportation causes several major negative externalities. First, the costs of green- house gas emissions from motorized private and public vehicles are borne globally. Second, other air pollutants and noise from urban road transportation affect road users and others locally. Third, while the costs of congestion (time delays and extra fuel consumption), accidents, and infrastructure damage are largely borne by motorists collectively, there is still an externality because individual motorists increase these costs for other motorists. Because of these exter- nalities, motorists do not bear the full social marginal costs of driving and they drive too much. Urban road transportation causes several other externalities as well, including water pollu- at Technical Services - Serials on October 6, 2016 tion, vibrations, and visual intrusion. Roads also create a barrier to bicyclists and pedestrians. Moreover, when parking is underpriced, the time spent searching for parking, excessive use of land for parking, the contribution to the urban heat island effect, and problems of drainage can besignificantinurbanareas(Shoup2005).Inaddition,fuelconsumptioncanimposecostsatthe national level due to monopsony power in the world oil market and energy insecurity, although by most estimates the average costs are small (Bickel et al. 2006; Delucchi and McCubbin 2009). Many policy instruments can be used to control road transportation externalities, but all have their limitations. In the United States, vehicle emissions standards and ceilings on regional air quality have helped reduce emissions per vehicle kilometer.
    [Show full text]
  • The Efficacy of Congestion Pricing
    University of Tennessee at Chattanooga UTC Scholar Student Research, Creative Works, and Honors Theses Publications 5-2016 The efficacy of congestion pricing Zachary J. Ridder University of Tennessee at Chattanooga, [email protected] Follow this and additional works at: https://scholar.utc.edu/honors-theses Part of the Economics Commons Recommended Citation Ridder, Zachary J., "The efficacy of congestion pricing" (2016). Honors Theses. This Theses is brought to you for free and open access by the Student Research, Creative Works, and Publications at UTC Scholar. It has been accepted for inclusion in Honors Theses by an authorized administrator of UTC Scholar. For more information, please contact [email protected]. The Efficacy of Congestion Pricing By Zack Ridder Departmental Honors Thesis The University of Tennessee at Chattanooga Economics Department Project Direction: Dr. Leila Pratt Examination Date: 3/30/16 Examination Committee: Dr. Leila Pratt Dr. Bruce Hutchinson Dr. James Guilfoyle Dr. David Giles The Efficacy of Congestion Pricing By Zack Ridder 1 I. Introduction As the number of vehicles continues to climb road congestion will become a more prominent feature of urban centers and will likely worsen over time. This thesis will show that the most simple and effective way to combat congestion is the implementation of road pricing schemes in and around major metropolitan areas. For the most part the benefits of such a system outweigh the potential costs. These tolling systems force commuters to internalize the marginal social cost of driving, as opposed to only paying the average social cost and incurring a deadweight loss. This paper will first provide a review of the literature, tracing the theoretical development of congestion pricing from its early roots to modern studies.
    [Show full text]
  • Economic Fundamentals of Road Pricing: a Diagrammatic Analysis
    ___ IS (070 Pollcy Research WORKING PAPERS L Transport Public Disclosure Authorized Infrastructureand Urban Development Department TheWorld Bank December1992 WPS1070 EconomicFundamentals of RoadPricing Public Disclosure Authorized A DiagrammaticAnalysis Public Disclosure Authorized TimothyD. Hau Most economists agree that road pricing benefits society by curtailingcongestion. Efficiency analysis demonstrates why the Public Disclosure Authorized public rejects congestionpricing. A dedicatedroad or transport fund is more viable whenthe road users are chargednot only for the damagecaused by heavyvehicles but also for congestion. PolicyRearchWoding PapsdismLataeth rmdingsofwoiprogrcsatncountgethccxchangeofideaunangB nkstaffand til othas iMacenedin de-volopnelttssues. Them papcgs cary thenanm of die autho, reflactealy theirviews, znd shel be usedand citedaccordingly. hefindn.inu cprcsttion, andconduws aretheauthoz' own Tley shouldnoto atttbutedtotheWeWd Bank, its Boardof Directos,its managment,or any of itsmember counties. PolicyResearchl Transport| WPS1070 This paper - a product of the TransportDivision, Infrastructure and Urban DevelopmentDepartment'- is part of a larger effort in the departmentto evaluateoptions for chargingfor roaduse. Copiesof the paper are availablefree from the WorldBank, 1818H StreetNW,Washington, DC 20433.Please contact Jennifer Francis,room S 10-063,extension 31005 or 35205 (December1992, 96 pages). Hau presentsa conceptualframework for road On urban roads with indivisibilitiesand pricing based on a rigorousdiagrammatic
    [Show full text]
  • How Fair Is Road Pricing? Evaluating Equity in Transportation Pricing and Finance
    How Fair is Road Pricing? Evaluating Equity in Transportation Pricing and Finance September 29, 2010 This paper was prepared by a consultant to the Bipartisan Policy Center’s National Transportation Policy Project (NTPP). The opinions and recommendations in this paper are those of the consultant alone and not of the Bipartisan Policy Center or the members of NTPP. How Fair is Road Pricing? Evaluating Equity in Transportation Pricing and Finance September 29, 2010 Prepared by Brian D. Taylor, PhD, AICP Professor and Chair of Urban Planning Director, Institute of Transportation Studies UCLA School of Public Affairs Acknowledgements The author thanks Alexandra Evans and Rebecca Kalauskas who conducted background research for this paper, Hiroyuki Iseki and Eric Morris for their comments and suggestions, and Deborah Kim and Kim Tran who helped with editing and formatting. Table of Contents Executive Summary . 1 Overview of Transportation Pricing, Finance, and Equity . 5 Putting Transportation Pricing and Finance Equity in Context . 5 Competing Views of Fairness and Equity . 6 From Theory to Practice: Transportation Pricing and Finance Equity . 7 Geography and Equity . 9 Equitable Transportation Programs versus Equitable Transportation Systems . 12 The Divorce of Pricing and Finance in Transportation Policy . 13 Why the Push to Reunite Pricing and Finance? . 13 Transportation Pricing Equity: Compared to What? . 14 Case Studies: Addressing Equity Concerns in Practice . 19 Dedicating revenues to transit service and road improvements in the tolled corridor . .20 Limited scale and phased, incremental implementation . .20 Public outreach and education . 21 Conclusion: What’s a Fair Price for Transportation? . .23 Bibliography . .25 Appendix: Five Case Studies of Equity in Electronic Road Tolling Projects .
    [Show full text]
  • The Welfare Effect of Road Congestion Pricing
    The Welfare Effect of Road Congestion Pricing: Experimental Evidence and Equilibrium Implications∗ Gabriel E. Kreindler† January 17, 2018 Abstract The textbook policy response to traffic externalities is congestion pricing. However, quanti- fying the welfare consequences of pricing policies requires detailed knowledge of commuter pref- erences and of the road technology. I study the peak-hour traffic congestion equilibrium using rich travel behavior data and a field experiment grounded in theory. Using a newly developed smartphone app, I collected a panel data set with precise GPS coordinates for over 100,000 com- muter trips in Bangalore, India. To identify the key preference parameters in my model – the value of time spent driving and schedule flexibility – I designed and implemented a randomized experiment with two realistic congestion charge policies. The policies penalize peak-hour depar- ture times and driving through a small charged area, respectively. Structural estimates based on the experiment show that commuters exhibit moderate schedule flexibility and high value of time. In a separate analysis of the road technology, I find a moderate and linear effect of traffic volume on travel time. I combine the preference parameters and road technology using policy simulations of the equilibrium optimal congestion charge, which reveal notable travel time bene- fits, yet negligible welfare gains. Intuitively, the social value of the travel time saved by removing commuters from the peak-hour is not significantly larger than the costs to those commuters of traveling at different, inconvenient times. ∗I am deeply grateful to Ben Olken, Esther Duflo, Frank Schilbach, and Edward Glaeser for their advice and generous support throughout this project.
    [Show full text]
  • Congestion Pricing Basics
    Pricing Road Use to Address Congestion Congestion Pricing Basics JEFFREY N. BUXBAUM P HOTO olls have financed highway infrastructure : D The author is a Principal AVID since the Roman Empire. Although toll with Cambridge G revenue often may be used for other pur- ONZALEZ Systematics, Inc., poses, many believe that financing high- , M Cambridge, Massa - N Tway infrastructure is the main function of tolls. Tolls /DOT chusetts. He is a member for congestion pricing are different. They generate of the National Research revenue, but with the intent of changing travel behav- Council–appointed ior to make more efficient use of the transportation Committee on Equity system, by shifting some drivers to less congested Implications of periods, or to other modes, routes, or shared-ride Alternative Trans - vehicles, so that the traffic flows more freely. portation Finance Most products and services supplied in the mar- Mechanisms and of the ketplace rely on pricing to align demand with sup- TRB Congestion Pricing ply. If demand exceeds supply, prices will rise, and Committee. some customers will choose not to buy. Highways, however, are not priced this way, and the prices on the few facilities that are tolled are seldom allowed to vary according to changes in demand. Motivations for Congestion Pricing From the beginning of automobile travel, the U.S. system of paying for highways has relied largely on motor fuel taxes, excise taxes, sales taxes, and tolls. Motorists have grown accustomed to these methods of paying for the cost of building, maintaining, and operating highways. A system that sets a price for highway use as a way of reducing congestion would be a major change, potentially affecting where peo- ple live and work, locate businesses, and socialize.
    [Show full text]