Road tolls, diverted traffic and local traffic calming measures: Who should be in charge?

Secondary roads often suffer from diverted traffic trying to avoid congestion on major motorways. In this paper we study the traffic problems of a small town that is located parallel to a congested motorway and suffers from such diverted traffic (high local accident risks, local congestion and other nuisances). We assume that the motorway and the secondary road through the local town are under the jurisdiction of a different authority. A local government controls local accident risks and congestion using non-price measures such as speed bumps, traffic lights and explicit access restrictions for through traffic. A ‘federal’ government can control traffic levels on the motorway using tolls. We show the following results. First, competition between the federal and local authority leads to a Nash equilibrium where the toll is too high and there is too much traffic calming compared to the second-best social optimum. Second, if the local government uses traffic calming measures, imposing a federal toll on the main road is welfare-reducing, unless congestion on the main road is severe and accident risks and other traffic nuisances in the small town are unimportant. Third, traffic diverted from the main road to the local community gives the latter strong incentives to close the local road for through traffic, even when it is socially undesirable to do so. Fourth, if the access restriction only applies to through traffic by trucks, the conflict between federal and local authorities disappears: both will agree on restricting truck access. A numerical application using a two-link network between Leuven and Brussels (the highway and an alternative road passing through local communities) illustrates the theoretical results.