IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v67y2014icp69-80.html
   My bibliography  Save this article

A dynamic pricing strategy for high occupancy toll lanes

Author

Listed:
  • Jang, Kitae
  • Chung, Koohong
  • Yeo, Hwasoo

Abstract

High Occupancy Toll (HOT) lanes are emerging as a solution to the underutilization of High Occupancy Vehicle (HOV) lanes and also a means to generate revenue for the State Departments of Transportation. This paper proposes a method to determine the toll price dynamically in response to the changes in traffic condition, and describes the procedures for estimating the essential parameters. Such parameters include expected delays, available capacity for toll-paying vehicles and distribution of travelers’ value of time (VOT). The objective function of the proposed pricing strategy can be flexibly modified to minimize delay, maximize revenue or combinations of specified levels of delay and revenue. Real-world data from a 14-mile of freeway segment in the San Francisco Bay Area are used to demonstrate the applicability and feasibility of the proposed method, and findings and implications from this case study are discussed.

Suggested Citation

  • Jang, Kitae & Chung, Koohong & Yeo, Hwasoo, 2014. "A dynamic pricing strategy for high occupancy toll lanes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 67(C), pages 69-80.
    • Handle: RePEc:eee:transa:v:67:y:2014:i:c:p:69-80
    DOI: 10.1016/j.tra.2014.05.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965856414001232
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tra.2014.05.009?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. Ozbay, Kaan & Yanmaz-Tuzel, Ozlem, 2008. "Valuation of travel time and departure time choice in the presence of time-of-day pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(4), pages 577-590, May.
    2. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
    3. Small, Kenneth A. & Yan, Jia, 2001. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," Journal of Urban Economics, Elsevier, vol. 49(2), pages 310-336, March.
    4. John Calfee & Clifford Winston & Randolph Stempski, 2001. "Econometric Issues In Estimating Consumer Preferences From Stated Preference Data: A Case Study Of The Value Of Automobile Travel Time," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 699-707, November.
    5. Calfee, John & Winston, Clifford, 1998. "The value of automobile travel time: implications for congestion policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 83-102, July.
    6. Verhoef, Erik & Nijkamp, Peter & Rietveld, Piet, 1996. "Second-Best Congestion Pricing: The Case of an Untolled Alternative," Journal of Urban Economics, Elsevier, vol. 40(3), pages 279-302, November.
    7. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, January.
    8. David Hensher & William Greene, 2003. "The Mixed Logit model: The state of practice," Transportation, Springer, vol. 30(2), pages 133-176, May.
    9. Small, Kenneth A., 2001. "The Value of Pricing," University of California Transportation Center, Working Papers qt0rm449sx, University of California Transportation Center.
    10. Windover, John R. & Cassidy, Michael J., 2001. "Some observed details of freeway traffic evolution," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(10), pages 881-894, December.
    11. Newell, G. F., 1993. "A simplified theory of kinematic waves in highway traffic, part II: Queueing at freeway bottlenecks," Transportation Research Part B: Methodological, Elsevier, vol. 27(4), pages 289-303, August.
    12. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, July.
    13. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
    14. Liu, Louie Nan & McDonald, John F., 1999. "Economic efficiency of second-best congestion pricing schemes in urban highway systems," Transportation Research Part B: Methodological, Elsevier, vol. 33(3), pages 157-188, April.
    15. Small, Kenneth A. & Yan, Jia, 2001. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," Journal of Urban Economics, Elsevier, vol. 49(2), pages 310-336, March.
    16. Hess, Stephane & Bierlaire, Michel & Polak, John W., 2005. "Estimation of value of travel-time savings using mixed logit models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(2-3), pages 221-236.
    17. Newell, G. F., 1993. "A simplified theory of kinematic waves in highway traffic, part I: General theory," Transportation Research Part B: Methodological, Elsevier, vol. 27(4), pages 281-287, August.
    18. Erik T. Verhoef & Kenneth A. Small, 2004. "Product Differentiation on Roads," Journal of Transport Economics and Policy, University of Bath, vol. 38(1), pages 127-156, January.
    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. Zang, Guangzhi & Xu, Meng & Gao, Ziyou, 2020. "High-occupancy vehicle lane management with tradable credit scheme: An equilibrium analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    2. Wencheng Huang & Bin Shuai & Eric Antwi, 2019. "A two-stage optimization approach for subscription bus services network design: the China case," Public Transport, Springer, vol. 11(3), pages 589-616, October.
    3. M Rouhani, Omid, 2016. "Social welfare analysis of HOV to HOT conversion," MPRA Paper 75816, University Library of Munich, Germany.
    4. Xiqun (Michael) Chen & Xiang He & Chenfeng Xiong & Zheng Zhu & Lei Zhang, 2019. "A Bayesian Stochastic Kriging Optimization Model Dealing with Heteroscedastic Simulation Noise for Freeway Traffic Management," Transportation Science, INFORMS, vol. 53(2), pages 545-565, March.

    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. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Differentiated Road Pricing, Express Lanes and Carpools: Exploiting Heterogeneous Preferences in Policy Design," Working Papers 050616, University of California-Irvine, Department of Economics, revised Mar 2006.
    2. Cantos-Sánchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, José J. & Álvarez-SanJaime, Óscar, 2011. "Viability of new road infrastructure with heterogeneous users," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(5), pages 435-450, June.
    3. Ian W.H. Parry, 2009. "Pricing Urban Congestion," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 461-484, September.
    4. Button, Kenneth, 2004. "1. The Rationale For Road Pricing: Standard Theory And Latest Advances," Research in Transportation Economics, Elsevier, vol. 9(1), pages 3-25, January.
    5. Meng, Qiang & Liu, Zhiyuan & Wang, Shuaian, 2012. "Optimal distance tolls under congestion pricing and continuously distributed value of time," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(5), pages 937-957.
    6. Georgina Santos & Erik Verhoef, 2011. "Road Congestion Pricing," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 23, Edward Elgar Publishing.
    7. Ubbels, Barry & Verhoef, Erik T., 2008. "Governmental competition in road charging and capacity choice," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 174-190, March.
    8. Small, Kenneth A & Winston, Clifford & Yan, Jia, 2002. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability: Implications for Road Pricing," University of California Transportation Center, Working Papers qt8zd2r34k, University of California Transportation Center.
    9. De Borger, Bruno & Proost, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Economics of Transportation, Elsevier, vol. 1(1), pages 35-48.
    10. Light, Thomas, 2009. "Optimal highway design and user welfare under value pricing," Journal of Urban Economics, Elsevier, vol. 66(2), pages 116-124, September.
    11. Light, Thomas, 2012. "High Occupancy Toll Lane Performance Under Alternative Pricing Policies," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 51(2).
    12. Fosgerau, Mogens & Bierlaire, Michel, 2007. "A practical test for the choice of mixing distribution in discrete choice models," Transportation Research Part B: Methodological, Elsevier, vol. 41(7), pages 784-794, August.
    13. Kraus, Marvin, 2003. "A new look at the two-mode problem," Journal of Urban Economics, Elsevier, vol. 54(3), pages 511-530, November.
    14. Hossan, Md Sakoat & Asgari, Hamidreza & Jin, Xia, 2016. "Investigating preference heterogeneity in Value of Time (VOT) and Value of Reliability (VOR) estimation for managed lanes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 638-649.
    15. Kenneth Small, 2015. "The Bottleneck Model: An Assessment and Interpretation," Working Papers 141506, University of California-Irvine, Department of Economics.
    16. Edward Calthrop & Bruno De Borger & Stef Proost, 2007. "Externalities And Partial Tax Reform: Does It Make Sense To Tax Road Freight (But Not Passenger) Transport?," Journal of Regional Science, Wiley Blackwell, vol. 47(4), pages 721-752, October.
    17. Kenneth A. Small, 2009. "Private Provision of Highways: Economic Issues," Transport Reviews, Taylor & Francis Journals, vol. 30(1), pages 11-31, July.
    18. Wu, Wen-Xiang & Huang, Hai-Jun, 2014. "Finding anonymous tolls to realize target flow pattern in networks with continuously distributed value of time," Transportation Research Part B: Methodological, Elsevier, vol. 65(C), pages 31-46.
    19. Bruno de Borger & Stef Proost, 2004. "Vertical and horizontal tax competition in the transport sector," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(4), pages 45-64.
    20. Jonathan Leape, 2006. "The London Congestion Charge," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 157-176, Fall.

    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:transa:v:67:y:2014:i:c:p:69-80. 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/547/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.