IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v145y2021ics1366554520307808.html
   My bibliography  Save this article

Tradable credit scheme design with transaction cost and equity constraint

Author

Listed:
  • Zhang, Fang
  • Lu, Jian
  • Hu, Xiaojian

Abstract

In this paper, we study the tradable credit scheme design problem considering transaction cost and social equity. Heterogeneous users with different value of times (VOT) and elastic demand are assumed. The credit scheme is characterized by user anonymous initial endowment and link-specific credit charge, and incorporates transaction cost, which is associated with trading volume and independent of credit price. The equilibrium problem is formulated as a variational inequality (VI) problem and the existence and uniqueness of its solution are guaranteed. Based on the VI formulation, a credit scheme design problem with equity constraint is proposed, aimed at maximizing the total social welfare. Based on the results from the example network, the impacts of transaction cost under various equity constraints are investigated. It is found that the transaction cost can negatively affect travel disutility for low-VOT users, and the imposition of equity constraint can address the inequity.

Suggested Citation

  • Zhang, Fang & Lu, Jian & Hu, Xiaojian, 2021. "Tradable credit scheme design with transaction cost and equity constraint," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:transe:v:145:y:2021:i:c:s1366554520307808
    DOI: 10.1016/j.tre.2020.102133
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554520307808
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2020.102133?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. Wada, Kentaro & Akamatsu, Takashi, 2013. "A hybrid implementation mechanism of tradable network permits system which obviates path enumeration: An auction mechanism with day-to-day capacity control," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 60(C), pages 94-112.
    2. Xiao, Feng & Long, Jiancheng & Li, Lu & Kou, Gang & Nie, Yu, 2019. "Promoting social equity with cyclic tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 56-73.
    3. Tian, Li-Jun & Yang, Hai & Huang, Hai-Jun, 2013. "Tradable credit schemes for managing bottleneck congestion and modal split with heterogeneous users," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 54(C), pages 1-13.
    4. 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.
    5. 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.
    6. Tian, Ye & Chiu, Yi-Chang & Sun, Jian, 2019. "Understanding behavioral effects of tradable mobility credit scheme: An experimental economics approach," Transport Policy, Elsevier, vol. 81(C), pages 1-11.
    7. Miralinaghi, Mohammad & Peeta, Srinivas, 2016. "Multi-period equilibrium modeling planning framework for tradable credit schemes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 177-198.
    8. Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
    9. Xiao, Feng & Qian, Zhen (Sean) & Zhang, H. Michael, 2013. "Managing bottleneck congestion with tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 1-14.
    10. Wang, Hua & Zhang, Xiaoning, 2016. "Joint implementation of tradable credit and road pricing in public-private partnership networks considering mixed equilibrium behaviors," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 94(C), pages 158-170.
    11. Holger Scheel & Stefan Scholtes, 2000. "Mathematical Programs with Complementarity Constraints: Stationarity, Optimality, and Sensitivity," Mathematics of Operations Research, INFORMS, vol. 25(1), pages 1-22, February.
    12. Wu, Di & Yin, Yafeng & Lawphongpanich, Siriphong & Yang, Hai, 2012. "Design of more equitable congestion pricing and tradable credit schemes for multimodal transportation networks," Transportation Research Part B: Methodological, Elsevier, vol. 46(9), pages 1273-1287.
    13. 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.
    14. He, Fang & Yin, Yafeng & Shirmohammadi, Nima & Nie, Yu (Marco), 2013. "Tradable credit schemes on networks with mixed equilibrium behaviors," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 47-65.
    15. Wang, Xiaolei & Yang, Hai, 2012. "Bisection-based trial-and-error implementation of marginal cost pricing and tradable credit scheme," Transportation Research Part B: Methodological, Elsevier, vol. 46(9), pages 1085-1096.
    16. Yang, Hai & Wang, Xiaolei, 2011. "Managing network mobility with tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 45(3), pages 580-594, March.
    17. Wang, Xiaolei & Yang, Hai & Zhu, Daoli & Li, Changmin, 2012. "Tradable travel credits for congestion management with heterogeneous users," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 426-437.
    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. Wang, Guangmin & Xu, Meng & Grant-Muller, Susan & Gao, Zaihan, 2020. "Combination of tradable credit scheme and link capacity improvement to balance economic growth and environmental management in sustainable-oriented transport development: A bi-objective bi-level progr," Transportation Research Part A: Policy and Practice, Elsevier, vol. 137(C), pages 459-471.
    20. Dogterom, Nico & Ettema, Dick & Dijst, Martin, 2018. "Behavioural effects of a tradable driving credit scheme: Results of an online stated adaptation experiment in the Netherlands," Transportation Research Part A: Policy and Practice, Elsevier, vol. 107(C), pages 52-64.
    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. Zhang, Fang & Lu, Jian & Hu, Xiaojian & Fan, Ruochuan & Chen, Junlan, 2022. "Managing bottleneck congestion with tradable credit scheme under demand uncertainty," Research in Transportation Economics, Elsevier, vol. 95(C).

    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. 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.
    2. Zhang, Fang & Lu, Jian & Hu, Xiaojian & Fan, Ruochuan & Chen, Junlan, 2022. "Managing bottleneck congestion with tradable credit scheme under demand uncertainty," Research in Transportation Economics, Elsevier, vol. 95(C).
    3. Louis Balzer & Ludovic Leclercq, 2021. "Modal equilibrium of a tradable credit scheme with a trip-based MFD and logit-based decision-making," Papers 2112.07277, arXiv.org, revised Apr 2022.
    4. 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.
    5. 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.
    6. Fan, Wenbo & Xiao, Feng & Nie, Yu (Macro), 2022. "Managing bottleneck congestion with tradable credits under asymmetric transaction cost," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 158(C).
    7. 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.
    8. 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.
    9. Bao, Yue & Verhoef, Erik T. & Koster, Paul, 2019. "Regulating dynamic congestion externalities with tradable credit schemes: Does a unique equilibrium exist?," Transportation Research Part B: Methodological, Elsevier, vol. 127(C), pages 225-236.
    10. Gao, Ge & Sun, Huijun & Wu, Jianjun & Liu, Xinmin & Chen, Weiya, 2018. "Park-and-ride service design under a price-based tradable credits scheme in a linear monocentric city," Transport Policy, Elsevier, vol. 68(C), pages 1-12.
    11. 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.
    12. Ge Gao & Xinmin Liu & Huijun Sun & Jianjun Wu & Haiqing Liu & Wei (Walker) Wang & Zhen Wang & Tao Wang & Haoming Du, 2019. "Marginal Cost Pricing Analysis on Tradable Credits in Traffic Engineering," Mathematical Problems in Engineering, Hindawi, vol. 2019, pages 1-10, January.
    13. 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.
    14. Ding, Hongxing & Yang, Hai & Qin, Xiaoran & Xu, Hongli, 2023. "Credit charge-cum-reward scheme for green multi-modal mobility," Transportation Research Part B: Methodological, Elsevier, vol. 178(C).
    15. Wang, Hua & Zhang, Xiaoning, 2016. "Joint implementation of tradable credit and road pricing in public-private partnership networks considering mixed equilibrium behaviors," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 94(C), pages 158-170.
    16. Lessan, Javad & Fu, Liping & Bachmann, Chris, 2020. "Towards user-centric, market-driven mobility management of road traffic using permit-based schemes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    17. Lahlou, Salem & Wynter, Laura, 2017. "A Nash equilibrium formulation of a tradable credits scheme for incentivizing transport choices: From next-generation public transport mode choice to HOT lanes," Transportation Research Part B: Methodological, Elsevier, vol. 101(C), pages 185-212.
    18. Fei Han & Jian Wang & Lingli Huang & Yan Li & Liu He, 2023. "Modeling Impacts of Implementation Policies of Tradable Credit Schemes on Traffic Congestion in the Context of Traveler’s Cognitive Illusion," Sustainability, MDPI, vol. 15(15), pages 1-18, July.
    19. 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.
    20. Luan, Mingye & Waller, S.Travis & Rey, David, 2023. "A non-additive path-based reward credit scheme for traffic congestion management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).

    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:transe:v:145:y:2021:i:c:s1366554520307808. 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/600244/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.