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A pareto optimum congestion reduction scheme

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  • Daganzo, Carlos F.

Abstract

This article shows that certain congestion reduction schemes have the potential for not penalizing anyone. The traditional social welfare approach is modified to address the distribution of gains and losses across the population. As a first step in this line of research, we consider a transportation system where congestion delay is simply given by a function of its user flow. We show that a particular pricing scheme with variable tolls, that can be viewed as hybrid between rationing and pricing, can benefit everyone (unlike pure pricing alone) even if the collected revenues are not returned to the population. The simple conditions under which this is possible are identified. Few data are needed to choose a beneficial policy. Examples are given.

Suggested Citation

  • Daganzo, Carlos F., 1995. "A pareto optimum congestion reduction scheme," Transportation Research Part B: Methodological, Elsevier, vol. 29(2), pages 139-154, April.
  • Handle: RePEc:eee:transb:v:29:y:1995:i:2:p:139-154
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    Cited by:

    1. Sathaye, Nakul & Harley, Robert & Madanat, Samer, 2010. "Unintended environmental impacts of nighttime freight logistics activities," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(8), pages 642-659, October.
    2. Carrion, Carlos & Levinson, David, 2012. "Value of travel time reliability: A review of current evidence," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(4), pages 720-741.
    3. Zhu, Shanjiang & Du, Longyuan & Zhang, Lei, 2013. "Rationing and pricing strategies for congestion mitigation: Behavioral theory, econometric model, and application in Beijing," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 210-224.
    4. Jan Rouwendal & Erik T. Verhoef & Jasper Knockaert, 2010. "Give or take? Rewards vs. Charges for a Congested Bottleneck," Tinbergen Institute Discussion Papers 10-062/3, Tinbergen Institute.
    5. Yang, Hai & Wang, Xiaolei, 2011. "Managing network mobility with tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 45(3), pages 580-594, March.
    6. C. Robin Lindsey & Erik T. Verhoef, 2000. "Traffic Congestion and Congestion Pricing," Tinbergen Institute Discussion Papers 00-101/3, Tinbergen Institute.
    7. Bulteau, Julie, 2012. "Tradable emission permit system for urban motorists: The neo-classical standard model revisited," Research in Transportation Economics, Elsevier, vol. 36(1), pages 101-109.
    8. Wu, Di & Yin, Yafeng & Lawphongpanich, Siriphong, 2011. "Pareto-improving congestion pricing on multimodal transportation networks," European Journal of Operational Research, Elsevier, vol. 210(3), pages 660-669, May.
    9. Yu Ding & Huapu Lu & Lei Zhang, 2016. "An analysis of activity time use on vehicle usage rationed days," Transportation, Springer, vol. 43(1), pages 145-158, January.
    10. Yu Nie, 2015. "A New Tradable Credit Scheme for the Morning Commute Problem," Networks and Spatial Economics, Springer, vol. 15(3), pages 719-741, September.
    11. Nie, Yu (Marco) & Yin, Yafeng, 2013. "Managing rush hour travel choices with tradable credit scheme," Transportation Research Part B: Methodological, Elsevier, vol. 50(C), pages 1-19.
    12. Yu Ding & Huapu Lu & Lei Zhang, 2016. "An analysis of activity time use on vehicle usage rationed days," Transportation, Springer, vol. 43(1), pages 145-158, January.
    13. Charles Raux, 2008. "Tradable driving rights in urban areas: their potential for tackling congestion and traffic-related pollution," Post-Print halshs-00185012, HAL.
    14. Lei Zhang & David Levinson, 2004. "Pricing, Investment, and Network Equilibrium," Working Papers 000032, University of Minnesota: Nexus Research Group.
    15. Guo, Xiaolei & Yang, Hai, 2010. "Pareto-improving congestion pricing and revenue refunding with multiple user classes," Transportation Research Part B: Methodological, Elsevier, vol. 44(8-9), pages 972-982, September.
    16. Rouwendal, Jan & Verhoef, Erik T. & Knockaert, Jasper, 2012. "Give or take? Rewards versus charges for a congested bottleneck," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 166-176.
    17. Kockelman, Kara M. & Kalmanje, Sukumar, 2005. "Credit-based congestion pricing: a policy proposal and the public's response," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(7-9), pages 671-690.
    18. Kockelman, Kara M. & Lemp, Jason D., 2011. "Anticipating new-highway impacts: Opportunities for welfare analysis and credit-based congestion pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(8), pages 825-838, October.
    19. Nakamura, Katsuhiko & Kockelman, Kara Maria, 2002. "Congestion pricing and roadspace rationing: an application to the San Francisco Bay Bridge corridor," Transportation Research Part A: Policy and Practice, Elsevier, vol. 36(5), pages 403-417, June.
    20. repec:eee:transb:v:110:y:2018:i:c:p:1-25 is not listed on IDEAS

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