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Delayer Pays Principle: Examining Congestion Pricing with Compensation

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  • David Levinson

    ()
    (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)

  • Peter Rafferty

Abstract

Despite its virtues, congestion pricing has yet to be widely adopted. This paper explores the issues of equity and use of toll revenue and several possible alternatives. The equity and efficiency problems of conventional (uncompensated) congestion pricing are outlined. Then, several alternatives are discussed and developed. A new compensation mechanism is developed, called the delayer pays principle. This principle ensures that those who arecause delay to others pay a toll to compensate those who are delayed. We evaluate the effectiveness of this idea by simulating alternative tolling approaches and evaluating the results across several measures, including delay, social cost, consumer surplus, and equity. Different tolling approaches can satisfy widely varying policy objectives, thus this principle is applicable in diverse situations. Such a system is viable and can eliminate some common hurdles of congestion pricing while remaining revenue neutral.

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File URL: http://nexus.umn.edu/Papers/DelayerPays.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number 200407.

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Date of creation: 2004
Date of revision:
Publication status: Published in International Journal of Transport Economics 31:3 295-311
Handle: RePEc:nex:wpaper:delayerpays

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Postal: Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455
Phone: +01 (612) 625-6354
Fax: +01 (612) 626-7750
Web page: http://nexus.umn.edu
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  1. Arnott, R. & De Palma, A. & Lindseyt, R., 1995. "Recent Developments in the Bottleneck Model," Papers 9523, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
  2. 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.
  3. Fielding, Gordon J. & Klein, Daniel B., 1993. "How To Franchise Highways," University of California Transportation Center, Working Papers qt79z9x6fs, University of California Transportation Center.
  4. 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.
  5. 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.
  6. 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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Cited by:
  1. Jovanović, Radosav & Tošić, Vojin & Čangalović, Mirjana & Stanojević, Milan, 2014. "Anticipatory modulation of air navigation charges to balance the use of airspace network capacities," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 84-99.
  2. Tyler Patterson & David Levinson, 2008. "Lexus Lanes or Corolla Lanes? Spatial Use and Equity Patterns on the I-394 MnPASS Lanes," Working Papers 000051, University of Minnesota: Nexus Research Group.
  3. Ch'ng, Kean Siang, 2010. "Individual tradable permit market and traffic congestion: An experimental study," MPRA Paper 26638, University Library of Munich, Germany.

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