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Congesting Pricing in a Road and Rail Network with Heterogeneous Values of Time and Schedule Delay

Author

Listed:
  • Vincent van den Berg

    (VU University Amsterdam)

  • Erik T. Verhoef

    (VU University Amsterdam)

Abstract

We analyse congestion pricing in a road and rail network with heterogeneous users. On the road there is bottleneck congestion. In the train there is crowding congestion. We separately analyse "proportional heterogeneity" that varies the values of time and schedule delay scalarly in fixed proportions and "ratio heterogeneity" that is in the ratio of value of time to value of schedule delay. We analyse first-best pricing and second-best pricing on only road or rail. More "ratio heterogeneity" lowers the relative efficiency of welfare maximisation by pricing only the road. This relative efficiency also decreases with proportional heterogeneity. Conversely, in previous research with two parallel roads, the relative efficiency of "single-link pricing" increased with proportional heterogeneity. This difference is caused by two road being perfect substitutes, while car and train are imperfect substitutes. The welfare gain of congestion pricing in the train is les s affected by heterogeneity. However, the relative efficiency of "profit maximisation on rail only" decreases with proportional and ratio heterogeneity. There are marked differences in the distributional effects on road and rail. On the road, pricing is generally more beneficial for the user the higher her value of time or schedule delay is. In the train, pricing has no distributional effects or is less beneficial the higher a user's value of time or schedule delay is.

Suggested Citation

  • Vincent van den Berg & Erik T. Verhoef, 2011. "Congesting Pricing in a Road and Rail Network with Heterogeneous Values of Time and Schedule Delay," Tinbergen Institute Discussion Papers 11-059/3, Tinbergen Institute, revised 24 May 2012.
    • Handle: RePEc:tin:wpaper:20110059
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    References listed on IDEAS

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    Cited by:

    1. Paul Koster & Hans Koster, 2013. "Commuters' Preferences for Fast and Reliable Travel," Tinbergen Institute Discussion Papers 13-075/VIII, Tinbergen Institute, revised 30 Apr 2015.
    2. Yu, Xiaojuan & van den Berg, Vincent A.C. & Verhoef, Erik T., 2019. "Carpooling with heterogeneous users in the bottleneck model," Transportation Research Part B: Methodological, Elsevier, vol. 127(C), pages 178-200.
    3. Paul Koster & Hans Koster, 2013. "Analysing Heterogeneity in the Value of Travel Time and Reliability: A Semiparametric Estimation Approach," ERSA conference papers ersa13p1032, European Regional Science Association.
    4. Paul Koster & Erik T. Verhoef & Simon Shepherd & David Watling, 2014. "Probabilistic Choice and Congestion Pricing with Heterogeneous Travellers and Price-Sensitive Demand," Tinbergen Institute Discussion Papers 14-078/VIII, Tinbergen Institute, revised 13 Nov 2014.
    5. Guo, Ren-Yong & Szeto, W.Y., 2018. "Day-to-day modal choice with a Pareto improvement or zero-sum revenue scheme," Transportation Research Part B: Methodological, Elsevier, vol. 110(C), pages 1-25.

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    More about this item

    Keywords

    Congestion Pricing; Car Travel; Train Travel; Heterogeneity in Value of Time; Heterogeneity in Value of Schedule Delay; Substitute Modes;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • 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

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