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Coarse Tolling with Heterogeneous Preferences

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  • Vincent A.C. van den Berg

    (VU University Amsterdam)

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    Abstract

    This paper analyses optimal coarse tolling of congestion under heterogeneous preferences, and especially the welfare and distributional effects. With coarse tolling, the toll equals a fixed value during the centre of the peak; outside this period, it is zero. This paper separately investigates three dimensions of heterogeneity. With the first, all values of time and schedule delay vary in fixed proportions ,and this heterogeneity may stem from income differences. The second has differences in the flexibility of users when to arrive. The third captures differences in willingness to arrive before or after the preferred arrival time. The paper uses three models of coarse tolling: the “Laih”, “ADL”, and “Braking” model. All three dimensions affect the welfare gain of coarse tolling. In the Laih model, the generalised price with coarse tolling is always in between the no -toll and first – best one. In the other models, this is not the case and distributional effects may be non-monotonic and very different from the first - best toll’s effects. In the Braking model, the bottleneck capacity goes unused for some time during the tolled period; compared with in the Laih model, this raises total cost, and it is most harmful for users with low values and difficulty to arrive late: e.g. low –income users with a strict work start time or a trip to the doctor.

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    Bibliographic Info

    Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 13-120/VIII.

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    Date of creation: 22 Aug 2013
    Date of revision: 20 Dec 2013
    Handle: RePEc:dgr:uvatin:20130120

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

    Related research

    Keywords: Coarse tolling; heterogeneous preferences; distributional effects; bottleneck model; proportional heterogeneity;

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    References

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    1. 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.
    2. Börjesson, Maria & Kristoffersson, Ida, 2012. "Estimating welfare effects of congestion charges in real world settings," Working papers in Transport Economics 2012:13, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    3. van den Berg, Vincent A.C., 2012. "Step-tolling with price-sensitive demand: Why more steps in the toll make the consumer better off," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1608-1622.
    4. Fosgerau, Mogens & Small, Kenneth E., 2012. "Hypercongestion in downtown metropolis," MPRA Paper 43411, University Library of Munich, Germany.
    5. Arnott Richard & Kraus Marvin, 1995. "Financing Capacity in the Bottleneck Model," Journal of Urban Economics, Elsevier, vol. 38(3), pages 272-290, November.
    6. Lei Zhang & David M. Levinson & Shanjiang Zhu, 2008. "Agent-Based Model of Price Competition, Capacity Choice, and Product Differentiation on Congested Networks," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 42(3), pages 435-461, September.
    7. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1990. "Economics of a bottleneck," Journal of Urban Economics, Elsevier, vol. 27(1), pages 111-130, January.
    8. Chen-Hsiu Laih, 2004. "Effects of the optimal step toll scheme on equilibrium commuter behaviour," Applied Economics, Taylor & Francis Journals, vol. 36(1), pages 59-81.
    9. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-79, March.
    10. Robin Lindsey, C. & van den Berg, Vincent A.C. & Verhoef, Erik T., 2012. "Step tolling with bottleneck queuing congestion," Journal of Urban Economics, Elsevier, vol. 72(1), pages 46-59.
    11. Xiao, Feng & Shen, Wei & Michael Zhang, H., 2012. "The morning commute under flat toll and tactical waiting," Transportation Research Part B: Methodological, Elsevier, vol. 46(10), pages 1346-1359.
    12. Small, Kenneth A. & Winston, Clifford & Yan, Jia, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Working paper 179, Regulation2point0.
    13. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
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