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Welfare implications of nonidentical time valuations under constrained road pricing policies : analytical studies with corridor and urban-wide networks

by Sapkota, Virginia A.

Abstract (Summary)
The goal of the research is to devise an equitable road pricing system which would leave the majority of routes free of tolls, so that low income people would suffer no cash loss although they would probably suffer loss of time. The aims of the dissertation are twofold. The first is to provide a numerical analysis of how urban commuters with differing abilities to pay would respond to additional road user charges. The welfare implications of such differential responses are examined and their policy implications analysed. The second aim is to develop a practical framework to model congestion pricing policies in the context of heterogeneous users. To achieve these aims, the following objectives have been set: (a) Using a simple network with two parallel competing routes, determine both welfare maximising and revenue maximising tolls under the constraint that only one route can be priced. In this setting, determine the allocation of traffic between the alternative routes, the efficiency gain, the revenue, the changes in travel cost and the distributional effects. (b) Establish a realistic model of an actual urban area to examine the impacts of selectively tolling congestible routes. As in the simple network case, assess the effects of toll policy on traffic distribution, network efficiency, revenues, and the welfare of the individual consumer and society. (c) Evaluate whether the non-identical treatment of users will enhance the acceptability of congestion pricing as a transport policy. Results from the simulations indicate that non-identical treatment of drivers? responses to toll charges provides better understanding of the differential impacts of various pricing policies. Allowing for heterogeneity in time valuation provides a better assessment of the efficiency of pricing policies and of the welfare impacts of toll charges, as it is able to capture their differential effects. More importantly, it shows that low-income commuters may not be significantly worse off with pricing especially when there is a free alternative route. This research demonstrates the need to adopt appropriate analytical techniques and assumptions when modelling the traffic equilibrium in a network with tolls. These include relaxing the homogeneity assumption, examining sensitivity to supply function parameter values and to the effect of vehicle operating cost, and using a route rather than link based measure of consumer surplus
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Source Type:Master's Thesis

Keywords:toll roads economic aspects congestion pricing second best non identical time valuations welfare impact of tolls

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Date of Publication:01/01/2004

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