IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Give or take? Rewards versus charges for a congested bottleneck

  • Rouwendal, Jan
  • Verhoef, Erik T.
  • Knockaert, Jasper

This paper analyzes the possibilities to relieve traffic congestion using subsidies instead of Pigouvian taxes, as well as revenue-neutral combinations of rewards and taxes (‘feebates’). The model considers a Vickrey–ADL model of bottleneck congestion with endogenous scheduling. With inelastic demand, a fine (time-varying) reward is found to be equivalent to a fine toll, and to a continuum of combinations of time-varying tolls and rewards, including fine feebates. When demand is price-sensitive, a reward becomes less attractive from the efficiency viewpoint, because it attracts additional users to the congested bottleneck. As a result, both the second-best optimal fraction of rewarded travelers in the scheme, and the relative efficiency that can be achieved with it, decrease when demand becomes more elastic. Our analytical and simulation results for coarse schemes reveal that a coarse reward is less effective than a coarse feebate, which is itself less effective than a coarse toll. The most efficient coarse system is the step toll, which is also allowed to be positive in the fringes of the peak. Despite the smaller efficiency gains, rewards and feebates may be attractive to use in circumstances where public and political acceptability of tolling is especially low, so that its implementation is unlikely, including the temporary use of price incentives in case of road works and large-scale events.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0166046211001062
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 42 (2012)
Issue (Month): 1-2 ()
Pages: 166-176

as
in new window

Handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:166-176
Contact details of provider: Web page: http://www.elsevier.com/locate/regec

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Daganzo, Carlos F., 1995. "A pareto optimum congestion reduction scheme," Transportation Research Part B: Methodological, Elsevier, vol. 29(2), pages 139-154, April.
  2. 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.
  3. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1990. "Economics of a bottleneck," Journal of Urban Economics, Elsevier, vol. 27(1), pages 111-130, January.
  4. Laih, Chen-Hsiu, 1994. "Queueing at a bottleneck with single- and multi-step tolls," Transportation Research Part A: Policy and Practice, Elsevier, vol. 28(3), pages 197-208, May.
  5. Bliemer, Michiel C.J. & van Amelsfort, Dirk H., 2010. "Rewarding instead of charging road users: a model case study investigating effects on traffic conditions," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 44, pages 23-40.
  6. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
  7. 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.
  8. Chu, Xuehao, 1999. "Alternative congestion pricing schedules," Regional Science and Urban Economics, Elsevier, vol. 29(6), pages 697-722, November.
  9. C. Robin Lindsey & Vincent A.C. van den Berg & Erik T. Verhoef, 2010. "Step by Step: Revisiting Step Tolling in the Bottleneck Model," Tinbergen Institute Discussion Papers 10-118/3, Tinbergen Institute, revised 02 Aug 2012.
  10. E Verhoef & P Nijkamp & P Rietveld, 1997. "Tradeable permits: their potential in the regulation of road transport externalities," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 24(4), pages 527-548, July.
  11. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:166-176. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.