Coarse Tolling with Heterogeneous Preferences

This paper resulted in a publication in Transportation Research Part B: Methodological 64, 1-23. 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.