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Pareto-Improving and Self-Sustainable Pricing for the Morning Commute with Nonidentical Commuters

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  • Feng Xiao

    (School of Transportation and Logistics, Southwest Jiaotong University, Chengdu, Sichuan 610031, China)

  • H. M. Zhang

    (Department of Civil and Environmental Engineering, University of California, Davis, Davis, California 95616; and School of Transportation Engineering, Tongji University, Shanghai 200092, China)

Abstract

Congestion pricing, one of the effective tools to reduce congestion in a transportation network, may cause inequity among commuters if the differences in their value of time (VOT) are not properly taken into account. In this paper, we develop a bimodal competition model within the context of nonidentical commuters and departure time choice to study toll design, mode share, and benefit distribution problems. We first show that for a single bottleneck without schedule-late delay, commuters pass the bottleneck in increasing order of VOT under an optimal dynamic toll, and the optimal toll curve is strictly increasing and convex. Equipped with this result, we then derive the corresponding toll patterns, departure profiles, mode share, and user benefits in the morning commute under congestion tolls. We find that a queue-eliminating dynamic toll on the highway can drive the two-mode system to optimum, and it is Pareto improving. However, when a constant toll is used, commuters in the middle of the VOT distribution are possibly made worse off by the toll. By proposing a transit subsidy together with a toll charge on the highway, we obtain a core of feasible toll plus subsidy schemes that can simultaneously achieve three goals: driving the system toward optimum, benefiting every commuter, and financing itself without external investment. The results show that to be in this core, the toll charge can neither be too low nor too high.

Suggested Citation

  • Feng Xiao & H. M. Zhang, 2014. "Pareto-Improving and Self-Sustainable Pricing for the Morning Commute with Nonidentical Commuters," Transportation Science, INFORMS, vol. 48(2), pages 159-169, May.
    • Handle: RePEc:inm:ortrsc:v:48:y:2014:i:2:p:159-169
    DOI: 10.1287/trsc.1120.0450
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    References listed on IDEAS

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    3. Li, Zhi-Chun & Zhang, Liping, 2020. "The two-mode problem with bottleneck queuing and transit crowding: How should congestion be priced using tolls and fares?," Transportation Research Part B: Methodological, Elsevier, vol. 138(C), pages 46-76.
    4. Wang, Wei (Walker) & Wang, David Z.W. & Zhang, Fangni & Sun, Huijun & Zhang, Wenyi & Wu, Jianjun, 2017. "Overcoming the Downs-Thomson Paradox by transit subsidy policies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 126-147.
    5. Zhi-Chun Li & De-Ping Yu & André de Palma, 2024. "Bottleneck congestion and urban spatial structure with heterogeneous households: Equilibrium, capacity expansion and congestion tolling," THEMA Working Papers 2024-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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    9. André de Palma & Zhi-Chun Li & De-Ping Yu, 2023. "An analytical model for residential location choices of heterogeneous households in a monocentric city with stochastic bottleneck congestion," THEMA Working Papers 2023-01, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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