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Integrating congestion pricing, transit subsidies and mode choice

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  • Basso, Leonardo J.
  • Jara-Díaz, Sergio R.

Abstract

We model and analyze optimal (welfare maximizing) prices and design of transport services in a bimodal context. Car congestion and transit design are simultaneously introduced and consumers choose based on the full price they perceive. The optimization variables are the congestion toll, the transit fare (and hence the level of subsidies) and transit frequency. We obtain six main results: (i) the optimal car-transit split is generally different from the total cost minimizing one; (ii) optimal congestion and transit price are interdependent and have an optimal frequency attached; (iii) the optimal money price difference together with the optimal frequency yield the optimal modal split; (iv) if this modal split is used in traditional stand-alone formulations – where each mode is priced independently–resulting congestion tolls and transit subsidies and fares are consistent with the optimal money price difference; (v) self-financing of the transport sector is feasible; and (vi) investment in car infrastructure induces an increase in generalized cost for all public transport users.

Suggested Citation

  • Basso, Leonardo J. & Jara-Díaz, Sergio R., 2012. "Integrating congestion pricing, transit subsidies and mode choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(6), pages 890-900.
  • Handle: RePEc:eee:transa:v:46:y:2012:i:6:p:890-900
    DOI: 10.1016/j.tra.2012.02.013
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    References listed on IDEAS

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    1. Sergio R. Jara-Díaz & Antonio Gschwender, 2003. "From the Single Line Model to the Spatial Structure of Transit Services: Corridors or Direct?," Journal of Transport Economics and Policy, University of Bath, vol. 37(2), pages 261-277, May.
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    Cited by:

    1. Socorro, M. Pilar & Viecens, M. Fernanda, 2013. "The effects of airline and high speed train integration," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 160-177.
    2. Wang, Wei (Walker) & Wang, David Z.W. & Zhang, Fangni & Sun, Huijun & Zhang, Wenyi & Wu, Jianjun, 2017. "Overcoming the Downs-Thomson Paradox by transit subsidy policies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 126-147.
    3. repec:eee:trapol:v:68:y:2018:i:c:p:142-157 is not listed on IDEAS
    4. Zhang, Fangni & Yang, Hai & Liu, Wei, 2014. "The Downs–Thomson Paradox with responsive transit service," Transportation Research Part A: Policy and Practice, Elsevier, vol. 70(C), pages 244-263.
    5. Tikoudis, Ioannis & Verhoef, Erik T. & van Ommeren, Jos N., 2015. "On revenue recycling and the welfare effects of second-best congestion pricing in a monocentric city," Journal of Urban Economics, Elsevier, vol. 89(C), pages 32-47.
    6. Canoquena, Joao Manuel da Costa, 2013. "Reconceptualising policy integration in road safety management," Transport Policy, Elsevier, vol. 25(C), pages 61-80.

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