Congestion Pricing with an Untolled Alternative ∗

Early research on congestion pricing took a very abstract view of demand. That is, it considered the demand for a transportation facility in a very aggregate fashion. Now, researchers are beginning to pay increasing attention to the choice processes that give rise to these demand functions (i.e., the decision to travel, origin/destination choice, mode choice, route choice, and departure-time choice). However, in so doing, past research has almost always assumed that all facilities will be tolled. That is, little attention has been given to the kind of facility-based pricing that is currently being proposed and tested in the United States (i.e., in which at least one alternative is left untolled. This paper demonstrates that it may be impossible to properly price more than one choice process when one alternative is left untolled.

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