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Winning or losing from dynamic bottleneck congestion pricing?

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  • van den Berg, Vincent
  • Verhoef, Erik T.

Abstract

This paper analyses the efficiency and distributional impacts of congestion pricing in Vickrey's (1969) dynamic bottleneck model of congestion, allowing for continuous distributions of values of time and schedule delay. We find that congestion pricing can leave a majority of travellers better off even without returning the toll revenues to them. We also find that the consumer surplus losses or gains from tolling are not strictly monotonic in the value of time, because they also depend on the value of schedule delays. The greatest losses are not incurred by drivers with the lowest value of time, but by users with an intermediate value of schedule delays and the lowest value of time for that value of schedule delays. For second-best pricing with an untolled alternative, the pattern of distributional effects is quite similar to that for first-best pricing. In contrast with results from prior static models, users who are indifferent between the two alternative routes are not the ones who gain least from this type of second-best pricing. Our results suggest that, in assessing the distributional impacts of road congestion pricing, it is important to take into account both the distribution of the value of time and of the value of schedule delays, as well as the dynamics of departure time choice.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 7 ()
Pages: 983-992

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:7:p:983-992

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Web page: http://www.elsevier.com/locate/inca/505578

Related research

Keywords: Traffic congestion; Road pricing; Heterogeneity; Distributional impacts; Bottleneck model;

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References

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  1. Richard Arnott & Andre de Palma & Robin Lindsey, 1985. "Economics of a Bottleneck," Working Papers 636, Queen's University, Department of Economics.
  2. Inge Mayeres & Stef Proost, 1998. "Marginal Tax Reform, Externalities and Income Distribution," Center for Economic Studies - Discussion papers ces9832, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  3. AndrÊ de Palma & Robin Lindsey, 2000. "Private toll roads: Competition under various ownership regimes," The Annals of Regional Science, Springer, vol. 34(1), pages 13-35.
  4. Layard, Richard, 1977. "The Distributional Effects of Congestion Taxes," Economica, London School of Economics and Political Science, vol. 44(175), pages 297-304, August.
  5. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, 07.
  6. van den Berg, Vincent & Verhoef, Erik T., 2011. "Congestion tolling in the bottleneck model with heterogeneous values of time," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 60-78, January.
  7. Braid, Ralph M., 1996. "Peak-Load Pricing of a Transportation Route with an Unpriced Substitute," Journal of Urban Economics, Elsevier, vol. 40(2), pages 179-197, September.
  8. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
  9. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
  10. Small, Kenneth & Yan, Jia, 2000. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," Discussion Papers dp-00-08, Resources For the Future.
  11. Parry, Ian, 2000. "Comparing the Efficiency of Alternative Policies for Reducing Traffic Congestion," Discussion Papers dp-00-28, Resources For the Future.
  12. repec:reg:wpaper:179 is not listed on IDEAS
  13. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
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Cited by:
  1. Gubins, Sergejs & Verhoef, Erik T., 2014. "Dynamic bottleneck congestion and residential land use in the monocentric city," Journal of Urban Economics, Elsevier, vol. 80(C), pages 51-61.
  2. Fosgerau, Mogens & de Palma, André, 2013. "The dynamics of urban traffic congestion and the price of parking," Journal of Public Economics, Elsevier, vol. 105(C), pages 106-115.
  3. Paul Koster & Hans Koster, 2013. "Commuters' Preferences for Fast and Reliable Travel," Tinbergen Institute Discussion Papers 13-075/VIII, Tinbergen Institute, revised 24 Jun 2013.
  4. Paul Koster & Hans Koster, 2013. "Analysing Heterogeneity in the Value of Travel Time and Reliability: A Semiparametric Estimation Approach," ERSA conference papers ersa13p1032, European Regional Science Association.

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