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Tradable permits to manage urban mobility: Market design and experimental implementation

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  • Brands, Devi K.
  • Verhoef, Erik T.
  • Knockaert, Jasper
  • Koster, Paul R.

Abstract

Congestion levels remain a substantial challenge, while the traditional economic response to congestion – road pricing – remains politically infeasible in most locations. Tradable permits are likely to be a more viable alternative, because they do not require a net financial flow from road users to the government. It is therefore the right moment to design and empirically test tradable permit schemes for managing urban mobility. This paper presents and empirically tests a complete design of a market for tradable permits, both in terms of the conceptual set-up of the market as well as its technical implementation. The design is evaluated against a number of criteria, including: transparency and containment of transaction costs, stability of permit prices in relation to the dynamic equilibrium on the mobility market and the prevention of undesirable speculation and fraud. We present evidence of the empirical functioning of this market, using the results of a conducted lab-in-the-field experiment with virtual mobility behaviour and real financial incentives.

Suggested Citation

  • Brands, Devi K. & Verhoef, Erik T. & Knockaert, Jasper & Koster, Paul R., 2020. "Tradable permits to manage urban mobility: Market design and experimental implementation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 137(C), pages 34-46.
    • Handle: RePEc:eee:transa:v:137:y:2020:i:c:p:34-46
    DOI: 10.1016/j.tra.2020.04.008
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    Cited by:

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    2. De Borger, Bruno & Glazer, Amihai & Proost, Stef, 2022. "Strategic behavior under tradeable driving permits and congestion tolls: A political economy model," Journal of Urban Economics, Elsevier, vol. 128(C).
    3. Ravi Seshadri & André de Palma & Moshe Ben-Akiva, 2021. "Congestion Tolling−Dollars versus Tokens: Within-day Dynamics," THEMA Working Papers 2021-12, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    4. Provoost, Jesper & Cats, Oded & Hoogendoorn, Serge, 2023. "Design and classification of tradable mobility credit schemes," Transport Policy, Elsevier, vol. 136(C), pages 59-69.
    5. Bruno De Borger & Amihai Glazer & Stef Proost, 2021. "Rational Drivers and the Choice Between Congestion Tolls and Tradeable Permits: A Political Economy Model," CESifo Working Paper Series 8821, CESifo.
    6. de Palma, André & Lindsey, Robin, 2020. "Tradable permit schemes for congestible facilities with uncertain supply and demand," Economics of Transportation, Elsevier, vol. 21(C).
    7. Siyu Chen & Ravi Seshadri & Carlos Lima Azevedo & Arun P. Akkinepally & Renming Liu & Andrea Araldo & Yu Jiang & Moshe E. Ben-Akiva, 2021. "Market Design for Tradable Mobility Credits," Papers 2101.00669, arXiv.org, revised Sep 2022.
    8. Candia, Diego & Verhoef, Erik T., 2022. "Tradable mobility permits in a monocentric city with pre-existing labor taxation: A general equilibrium perspective," Transportation Research Part B: Methodological, Elsevier, vol. 163(C), pages 145-165.
    9. Ezzat Elokda & Saverio Bolognani & Andrea Censi & Florian Dorfler & Emilio Frazzoli, 2022. "A self-contained karma economy for the dynamic allocation of common resources," Papers 2207.00495, arXiv.org, revised May 2023.
    10. Devi Brands & Erik Verhoef & Jasper Knockaert, 2021. "Pcoins for parking: a field experiment with tradable mobility permits," Tinbergen Institute Discussion Papers 21-029/VIII, Tinbergen Institute.
    11. Krabbenborg, Lizet & van Langevelde-van Bergen, Chris & Molin, Eric, 2021. "Public support for tradable peak credit schemes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 145(C), pages 243-259.

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    More about this item

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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