IDEAS home Printed from https://ideas.repec.org/a/eee/transb/v57y2013icp210-224.html
   My bibliography  Save this article

Rationing and pricing strategies for congestion mitigation: Behavioral theory, econometric model, and application in Beijing

Author

Listed:
  • Zhu, Shanjiang
  • Du, Longyuan
  • Zhang, Lei

Abstract

Some travel demand management policies such as road pricing have been widely studied in literature. Rationing policies, including vehicle ownership quota and vehicle usage restrictions, have been implemented in several megaregions to address congestion and other negative transportation externalities, but not well explored in literature. Other strategies such as Vehicle Mileage Fee have not been well accepted by policy makers, but attract growing research interest. As policy makers face an increasing number of policy tools, a theoretical framework is needed to analyze these policies and provide a direct comparison of their welfare implications such as efficiency and equity. However, such a comprehensive framework does not exist in literature. To bridge this gap, this study develops an analytical framework for analyzing and comparing travel demand management policies, which consists of a mathematical model of joint household vehicle ownership and usage decisions and welfare analysis methods based on compensating variation and consumer surplus. Under the assumptions of homogenous users and single time period, this study finds that vehicle usage rationing performs better when relatively small percentages of users (i.e. low rationing ratio) are rationed off the roads and when induced demand elasticity resulting from congestion mitigation is low. When the amount of induced demand exceeds a certain level, it is shown analytically that vehicle usage restrictions will always cause welfare losses. When the policy goal is to reduce vehicle travel by a fixed portion, road pricing provides a larger welfare gain. The performance of different policies is influenced by network congestion and congestibility. This paper further generalizes the model to consider heterogenous users and demonstrates how it can be applied for policy analysis on a real network after careful calibration.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:transb:v:57:y:2013:i:c:p:210-224
    DOI: 10.1016/j.trb.2013.07.013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0191261513001288
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.trb.2013.07.013?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lucas W. Davis, 2008. "The Effect of Driving Restrictions on Air Quality in Mexico City," Journal of Political Economy, University of Chicago Press, vol. 116(1), pages 38-81, February.
    2. Hausman, Jerry A, 1985. "The Econometrics of Nonlinear Budget Sets," Econometrica, Econometric Society, vol. 53(6), pages 1255-1282, November.
    3. Jan Rouwendal & John Pommer, 2004. "An Indirect Utility Model of Multiple Car Ownership and Use," Tinbergen Institute Discussion Papers 04-085/3, Tinbergen Institute.
    4. Koh, Winston T. H., 2003. "Control of vehicle ownership and market competition: theory and Singapore's experience with the vehicle quota system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(9), pages 749-770, November.
    5. Burtless, Gary & Hausman, Jerry A, 1978. "The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiments," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1103-1130, December.
    6. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    7. Eskeland, Gunnar S & Feyzioglu, Tarhan, 1997. "Rationing Can Backfire: The "Day without a Car" in Mexico City," The World Bank Economic Review, World Bank, vol. 11(3), pages 383-408, September.
    8. Daganzo, Carlos F., 1995. "A pareto optimum congestion reduction scheme," Transportation Research Part B: Methodological, Elsevier, vol. 29(2), pages 139-154, April.
    9. Winston, Clifford & Mannering, Fred, 1984. "Consumer Demand for Automobile Safety," American Economic Review, American Economic Association, vol. 74(2), pages 316-319, May.
    10. Brownstone, David & Small, Kenneth A., 2003. "Valuing Time and Reliability: Assessing the Evidence from Road Pricing Demonstrations," University of California Transportation Center, Working Papers qt95z0p35k, University of California Transportation Center.
    11. Guesnerie, Roger & Roberts, Kevin, 1984. "Effective Policy Tools and Quantity Controls," Econometrica, Econometric Society, vol. 52(1), pages 59-86, January.
    12. Pinelopi Koujianou Goldberg, 1998. "The Effects of the Corporate Average Fuel Efficiency Standards in the US," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 1-33, March.
    13. 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.
    14. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-260, May.
    15. Zhang, H. M. & Ge, Y. E., 2004. "Modeling variable demand equilibrium under second-best road pricing," Transportation Research Part B: Methodological, Elsevier, vol. 38(8), pages 733-749, September.
    16. 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.
    17. Harrington, Winston & Krupnick, Alan J. & Alberini, Anna, 2001. "Overcoming public aversion to congestion pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(2), pages 87-105, February.
    18. Chen, Anthony & Lee, Der-Horng & Jayakrishnan, R., 2002. "Computational study of state-of-the-art path-based traffic assignment algorithms," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 59(6), pages 509-518.
    19. Chin, Anthony & Smith, Peter, 1997. "Automobile ownership and government policy: The economics of Singapore's vehicle quota scheme," Transportation Research Part A: Policy and Practice, Elsevier, vol. 31(2), pages 129-140, March.
    20. Yang, Hai & Wang, Xiaolei, 2011. "Managing network mobility with tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 45(3), pages 580-594, March.
    21. Yang, Hai & Meng, Qiang & Lee, Der-Horng, 2004. "Trial-and-error implementation of marginal-cost pricing on networks in the absence of demand functions," Transportation Research Part B: Methodological, Elsevier, vol. 38(6), pages 477-493, July.
    22. Verhoef, Erik T., 2002. "Second-best congestion pricing in general networks. Heuristic algorithms for finding second-best optimal toll levels and toll points," Transportation Research Part B: Methodological, Elsevier, vol. 36(8), pages 707-729, September.
    23. De Borger, Bruno & Mayeres, Inge, 2007. "Optimal taxation of car ownership, car use and public transport: Insights derived from a discrete choice numerical optimization model," European Economic Review, Elsevier, vol. 51(5), pages 1177-1204, July.
    24. Brownstone, David & Small, Kenneth A., 2005. "Valuing time and reliability: assessing the evidence from road pricing demonstrations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(4), pages 279-293, May.
    25. Fred Mannering & Clifford Winston, 1985. "A Dynamic Empirical Analysis of Household Vehicle Ownership and Utilization," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 215-236, Summer.
    26. 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.
    27. Lei Zhang & David M. Levinson & Shanjiang Zhu, 2008. "Agent-Based Model of Price Competition, Capacity Choice, and Product Differentiation on Congested Networks," Journal of Transport Economics and Policy, University of Bath, vol. 42(3), pages 435-461, September.
    28. Mary E. Renwick & Sandra O. Archibald, 1998. "Demand Side Management Policies for Residential Water Use: Who Bears the Conservation Burden?," Land Economics, University of Wisconsin Press, vol. 74(3), pages 343-359.
    29. De Jong, G. C., 1990. "An indirect utility model of car ownership and private car use," European Economic Review, Elsevier, vol. 34(5), pages 971-985, July.
    30. Barter, Paul A., 2005. "A vehicle quota integrated with road usage pricing: A mechanism to complete the phase-out of high fixed vehicle taxes in Singapore," Transport Policy, Elsevier, vol. 12(6), pages 525-536, November.
    31. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
    32. Koh, Winston T. H. & Lee, David K. C., 1994. "The vehicle quota system in Singapore: An assessment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 28(1), pages 31-47, January.
    33. Zhang, Xiaoning & Yang, Hai & Huang, Hai-Jun, 2011. "Improving travel efficiency by parking permits distribution and trading," Transportation Research Part B: Methodological, Elsevier, vol. 45(7), pages 1018-1034, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Zhi-Chun & Wu, Qiao-Yu & Yang, Hai, 2019. "A theory of auto ownership rationing," Transportation Research Part B: Methodological, Elsevier, vol. 127(C), pages 125-146.
    2. Yu, De-Ping & Li, Zhi-Chun, 2023. "Income distribution, implementation sequence, and equity in auto ownership rationing," Transportation Research Part B: Methodological, Elsevier, vol. 173(C), pages 59-89.
    3. Zhi-Chun Li Author-Name : Wen-Jing Liu Author-Name : André de Palma, "undated". "Spatial heterogeneity in vehicle license plate lottery rationing," THEMA Working Papers 2024-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    4. Bénédicte Meurisse & Maxime Le Roy, 2014. "Towards a clean vehicle fleet: from households’ valuation of fuel efficiency to policy implications," Working Papers 1406, Chaire Economie du climat.
    5. Chen, Dongxu & Sun, Yu & Yang, Zhongzhen, 2020. "Optimization of the travel ban scheme of cars based on the spatial distribution of the last digit of license plates," Transport Policy, Elsevier, vol. 94(C), pages 43-53.
    6. Bi, Huibo & Shang, Wen-Long & Chen, Yanyan & Wang, Kezhi & Yu, Qing & Sui, Yi, 2021. "GIS aided sustainable urban road management with a unifying queueing and neural network model," Applied Energy, Elsevier, vol. 291(C).
    7. 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.
    8. 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.
    9. Xu, Meng & Grant-Muller, Susan, 2016. "Trip mode and travel pattern impacts of a Tradable Credits Scheme: A case study of Beijing," Transport Policy, Elsevier, vol. 47(C), pages 72-83.
    10. Nie, Yu (Marco), 2017. "On the potential remedies for license plate rationing," Economics of Transportation, Elsevier, vol. 9(C), pages 37-50.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
    2. Chu, Singfat, 2015. "Car restraint policies and mileage in Singapore," Transportation Research Part A: Policy and Practice, Elsevier, vol. 77(C), pages 404-412.
    3. De Borger, Bruno & Mulalic, Ismir & Rouwendal, Jan, 2016. "Substitution between cars within the household," Transportation Research Part A: Policy and Practice, Elsevier, vol. 85(C), pages 135-156.
    4. Yang, Hai & Wang, Xiaolei, 2011. "Managing network mobility with tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 45(3), pages 580-594, March.
    5. Nie, Yu (Marco), 2017. "On the potential remedies for license plate rationing," Economics of Transportation, Elsevier, vol. 9(C), pages 37-50.
    6. Ren-Yong Guo & Hai-Jun Huang & Hai Yang, 2019. "Tradable Credit Scheme for Control of Evolutionary Traffic Flows to System Optimum: Model and its Convergence," Networks and Spatial Economics, Springer, vol. 19(3), pages 833-868, September.
    7. Fan, Wenbo & Jiang, Xinguo & Erdogan, Sevgi & Sun, Yanshuo, 2016. "Modeling and evaluating FAIR highway performance and policy options," Transport Policy, Elsevier, vol. 48(C), pages 156-168.
    8. Lawrence Goulder, 2007. "Distributional and Efficiency Impacts of Increased U.S. Gasoline Taxes," Discussion Papers 07-009, Stanford Institute for Economic Policy Research.
    9. Koji Miyawaki & Yasuhiro Omori & Akira Hibiki, 2018. "A discrete/continuous choice model on a nonconvex budget set," Econometric Reviews, Taylor & Francis Journals, vol. 37(2), pages 89-113, February.
    10. Ren-Yong Guo & Hai Yang & Hai-Jun Huang & Zhijia Tan, 2016. "Day-to-Day Flow Dynamics and Congestion Control," Transportation Science, INFORMS, vol. 50(3), pages 982-997, August.
    11. Antonio M. Bento & Lawrence H. Goulder & Mark R. Jacobsen & Roger H. von Haefen, 2009. "Distributional and Efficiency Impacts of Increased US Gasoline Taxes," American Economic Review, American Economic Association, vol. 99(3), pages 667-699, June.
    12. Dao-Li Zhu & Hai Yang & Chang-Min Li & Xiao-Lei Wang, 2015. "Properties of the Multiclass Traffic Network Equilibria Under a Tradable Credit Scheme," Transportation Science, INFORMS, vol. 49(3), pages 519-534, August.
    13. 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.
    14. Tscharaktschiew, Stefan, 2014. "Shedding light on the appropriateness of the (high) gasoline tax level in Germany," Economics of Transportation, Elsevier, vol. 3(3), pages 189-210.
    15. Wang, Jing-Peng & Liu, Tian-Liang & Huang, Hai-Jun, 2018. "Tradable OD-based travel permits for bi-modal traffic management with heterogeneous users," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 589-605.
    16. James O’Brien, 2018. "Age, autos, and the value of a statistical life," Journal of Risk and Uncertainty, Springer, vol. 57(1), pages 51-79, August.
    17. Ling-Ling Xiao & Tian-Liang Liu & Hai-Jun Huang, 2021. "Tradable permit schemes for managing morning commute with carpool under parking space constraint," Transportation, Springer, vol. 48(4), pages 1563-1586, August.
    18. 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.
    19. Charles Raux, 2008. "Tradable driving rights in urban areas: their potential for tackling congestion and traffic-related pollution," Post-Print halshs-00185012, HAL.
    20. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transb:v:57:y:2013:i:c:p:210-224. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/548/description#description .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.