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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.

Suggested Citation

  • David Levinson & Peter Rafferty, 2004. "Delayer Pays Principle: Examining Congestion Pricing with Compensation," Working Papers 200407, University of Minnesota: Nexus Research Group.
    • Handle: RePEc:nex:wpaper:delayerpays
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    File URL: http://hdl.handle.net/11299/179916
    File Function: First version, 2007
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    References listed on IDEAS

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    Cited by:

    1. Janusch, Nicholas, 2016. "A note on the distortionary effects of revenue-neutral tolls in a bottleneck congestion game," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 95-103.
    2. 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.
    3. Ch'ng, Kean Siang, 2010. "Individual tradable permit market and traffic congestion: An experimental study," MPRA Paper 26638, University Library of Munich, Germany.
    4. Kaddoura, Ihab & Nagel, Kai, 2019. "Congestion pricing in a real-world oriented agent-based simulation context," Research in Transportation Economics, Elsevier, vol. 74(C), pages 40-51.
    5. Ivanov, Nikola & Netjasov, Fedja & Jovanović, Radosav & Starita, Stefano & Strauss, Arne, 2017. "Air Traffic Flow Management slot allocation to minimize propagated delay and improve airport slot adherence," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 183-197.
    6. 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.

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    More about this item

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • D10 - Microeconomics - - Household Behavior - - - General
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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