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Differentiated Road Pricing, Express Lanes and Carpools: Exploiting Heterogeneous Preferences in Policy Design

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Author Info

  • Kenneth A. Small

    ()
    (Department of Economics, University of California-Irvine)

  • Clifford Winston

    (Brookings Institutions)

  • Jia Yan

    (Hong Kong Polytechnic University)

Abstract

In the face of rising congestion on the nation's road system, policymakers have explored ways to reduce travel delays. One approach has been to allocate reserved lanes, called high-occupancy-vehicle (HOV) lanes, to vehicles carrying two or more people. A recent innovation is to allow solo drivers to use the HOV lanes if they pay a toll. These so-called high-occupancy-toll (HOT) lanes can be found in Los Angeles, San Diego, Houston, and Minneapolis and are under consideration in several other urban areas. In this paper, we argue that HOV and HOT lanes sacrifice efficiency by failing to price all lanes.Moreover, we show that it is possible to set prices on all lanes that improve on the efficiency of HOV and HOT policies and by catering to motorists' varying preferences, can meet the test of political acceptability.

(This abstract was borrowed from another version of this item.)

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File URL: http://www.economics.uci.edu/files/economics/docs/workingpapers/2005-06/Small-16.pdf
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Bibliographic Info

Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 050616.

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Length: 16 pages
Date of creation: Nov 2005
Date of revision: Mar 2006
Publication status: Forthcoming in Brookings-Wharton Papers on Urban Affairs, 2006
Handle: RePEc:irv:wpaper:050616

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Postal: Irvine, CA 92697-3125
Phone: (949) 824-5788
Web page: http://www.economics.uci.edu/
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References

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  1. Brownstone, David & Train, Kenneth, 1999. "Forecasting new product penetration with flexible substitution patterns," University of California Transportation Center, Working Papers qt3tb6j874, University of California Transportation Center.
  2. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, Spring.
  3. Small, K. & Winston, C., 1998. ""The Demand for Transportation: Models and Applications"," Papers 98-99-6, California Irvine - School of Social Sciences.
  4. Choi, Ki-Hong & Moon, Choon-Geol, 1997. "Generalized extreme value model and additively separable generator function," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 129-140.
  5. Small, Kenneth A., 2001. "The Value of Pricing," University of California Transportation Center, Working Papers qt0rm449sx, University of California Transportation Center.
  6. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  7. Jiang, Meilan & Morikawa, Takayuki, 2004. "Theoretical analysis on the variation of value of travel time savings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(8), pages 551-571, October.
  8. Small, Kenneth A. & Winston, Clifford & Yan, Jia, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Working paper 179, Regulation2point0.
  9. Small, K.A. & Yan, J., 1999. "The Value of "Value Princing" of Roads: Second-Best Pricing and Product Differentiation," Papers 99-00-02, California Irvine - School of Social Sciences.
  10. Erik T. Verhoef & Kenneth A. Small, 2004. "Product Differentiation on Roads," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(1), pages 127-156, January.
  11. Steimetz, Seiji S.C. & Brownstone, David, 2005. "Estimating commuters' "value of time" with noisy data: a multiple imputation approach," Transportation Research Part B: Methodological, Elsevier, vol. 39(10), pages 865-889, December.
  12. Calfee, John & Winston, Clifford, 1998. "The value of automobile travel time: implications for congestion policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 83-102, July.
  13. repec:cup:etheor:v:8:y:1992:i:4:p:518-52 is not listed on IDEAS
  14. Lee, Lung-Fei, 1995. "Asymptotic Bias in Simulated Maximum Likelihood Estimation of Discrete Choice Models," Econometric Theory, Cambridge University Press, vol. 11(03), pages 437-483, June.
  15. Lee, Lung-Fei, 1992. "On Efficiency of Methods of Simulated Moments and Maximum Simulated Likelihood Estimation of Discrete Response Models," Econometric Theory, Cambridge University Press, vol. 8(04), pages 518-552, December.
  16. Small, Kenneth A. & Gomez-Ibanez, Jose A., 1999. "Urban transportation," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 46, pages 1937-1999 Elsevier.
  17. David Hensher, 2001. "The valuation of commuter travel time savings for car drivers: evaluating alternative model specifications," Transportation, Springer, vol. 28(2), pages 101-118, May.
  18. Verhoef, Erik & Nijkamp, Peter & Rietveld, Piet, 1996. "Second-Best Congestion Pricing: The Case of an Untolled Alternative," Journal of Urban Economics, Elsevier, vol. 40(3), pages 279-302, November.
  19. John Calfee & Clifford Winston & Randolph Stempski, 2001. "Econometric Issues In Estimating Consumer Preferences From Stated Preference Data: A Case Study Of The Value Of Automobile Travel Time," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 699-707, November.
  20. repec:cup:etheor:v:11:y:1995:i:3:p:437-83 is not listed on IDEAS
  21. Dahlgren, Joy, 1998. "High occupancy vehicle lanes: Not always more effective than general purpose lanes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(2), pages 99-114, February.
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Citations

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Cited by:
  1. André De Palma & Robin Lindsey, 2009. "Traffic Congestion Pricing Methods and Technologies," Working Papers hal-00414526, HAL.
  2. Bento, Antonio M. & Hughes, Jonathan E. & Kaffine, Daniel, 2013. "Carpooling and driver responses to fuel price changes: Evidence from traffic flows in Los Angeles," Journal of Urban Economics, Elsevier, vol. 77(C), pages 41-56.
  3. Eugene Amromin & Carrie Jankowski & Richard Porter, 2007. "Transforming payment choices by doubling fees on the Illinois Tollway," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 22-47.
  4. Winston, Clifford & Yan, Jia, 2011. "Can privatization of U.S. highways improve motorists' welfare?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 993-1005, August.
  5. repec:hal:cesptp:halshs-00467888 is not listed on IDEAS
  6. Clifford Winston & Jia Yan, 2008. "US Highway Privatization and Heterogeneous Preferences," Working Papers 2008-20, School of Economic Sciences, Washington State University.
  7. Hideo Konishi & Se-il Mun, 2009. "Carpooling and Congestion Pricing: HOV and HOT Lanes," Boston College Working Papers in Economics 719, Boston College Department of Economics.
  8. Yusuf, Juita-Elena (Wie) & O’Connell, Lenahan & Anuar, Khairul A., 2014. "For whom the tunnel be tolled: A four-factor model for explaining willingness-to-pay tolls," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 13-21.

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