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Bottleneck Congestion: Differentiating the Coarse Charge

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  • Jasper Knockaert

    (VU University Amsterdam)

  • Erik T. Verhoef

    (VU University Amsterdam)

  • Jan Rouwendal

    (VU University Amsterdam)

Abstract

The traditional bottleneck model for road congestion promotes the implementation of a triangular, fully time varying, charge as the optimal solution for the road congestion externality. However, cognitive and technological barriers put a practical limit to the degree of differentiation real world mplementations can handle. The traditional approach to accommodate for this concern has been a step toll, with the single step coarse charge as its simplest case. In this paper we study how efficiency of the coarse charge can be improved by differentiating its level and timing across groups of travellers. We use the traditional bottleneck model to analyse how the coarse charge can be differentiated over two groups of travellers assuming inelastic peak-hour demand. The results of our analysis indicate that differentiating the coarse charge across two groups of travellers considerably improves its efficiency without increasing cognitive effort and decision making costs for the individual traveller. A numeric illustration reveals a welfare gain of 69% of the first best charge, up from 53% for the generic coarse charge. This increase is similar to what is obtained by moving from the coarse charge to a generic two step toll. Once different groups have been defined, one could in fact achieve the same gains by temporal separation of drivers, for example by use of licence plate numbers. The presented charging regime has a considerable degree of flexibility with respect to share of travellers to attribute to each scheme, which further adds to its merits in practical applicability.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 10-097/3.

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Date of creation: 23 Sep 2010
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Handle: RePEc:dgr:uvatin:20100097

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Web page: http://www.tinbergen.nl

Related research

Keywords: Traffic congestion; Road pricing; Bottleneck model; Step tolls;

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Cited by:
  1. Fosgerau, Mogens, 2011. "How a fast lane may replace a congestion toll," MPRA Paper 42271, University Library of Munich, Germany.
  2. Mogens Fosgerau & André De Palma & Anders Karlstrom & Kenneth A. Small, 2012. "Trip timing and scheduling preferences," Working Papers hal-00742267, HAL.
  3. Feng Xiao & Zhen Qian & H. Zhang, 2011. "The Morning Commute Problem with Coarse Toll and Nonidentical Commuters," Networks and Spatial Economics, Springer, vol. 11(2), pages 343-369, June.

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