Modal choice and optimal congestion

We study the choice of transportation modes within a city where commuters have heterogeneous preferences for a car. As in standard models of externalities, the market outcome never maximizes aggregate welfare. We show that in the presence of multiple equilibria problems of coordination can worsen this result. We discuss two policy tools: taxation and traffic separation (e.g. exclusive lanes for public transportation). Setting the optimal policy is a necessary but not sufficient condition to maximize aggregate welfare. Even with a social planner maximizing aggregate welfare, a city may find itself stuck in a situation where public transportation remains inefficient and the level of congestion high.

[1]  H. Young.  The Economics of Convention , 1996 .

[2]  M. Wardman.  A REVIEW OF BRITISH EVIDENCE ON TIME AND SERVICE QUALITY VALUATIONS , 2001 .

[3]  W. Vickrey.  PRICING IN URBAN AND SUBURBAN TRANSPORT , 1994 .

[4]  André de Palma,et al.  Congestion in a city with a central bottleneck , 2012 .

[5]  Georgina Santos,et al.  The impact of the London congestion charging scheme on the generalised cost of car commuters to the city of London from a value of travel time savings perspective , 2006 .

[6]  Gabriela Beirão,et al.  Understanding attitudes towards public transport and private car: A qualitative study , 2007 .

[7]  M. Vugt.  Abslracl Commuting by car or public transportation ? A social dilemma analysis of travel mode judgements , 2004 .

[8]  André de Palma,et al.  Private roads, competition, and incentives to adopt time-based congestion tolling , 2002 .

[9]  Takatoshi Tabuchi,et al.  Bottleneck Congestion and Modal Split , 1993 .

[10]  Kali P. Rath.  A direct proof of the existence of pure strategy equilibria in games with a continuum of players , 1992 .

[11]  Michael A. Kemp,et al.  Chapter 26 Urban transportation , 1987 .

[12]  Robert Cervero,et al.  TRANSIT-ORIENTED DEVELOPMENT AND JOINT DEVELOPMENT IN THE UNITED STATES: A LITERATURE REVIEW , 2002 .

[13]  H. Young,et al.  The Evolution of Conventions , 1993 .

[14]  K. Small,et al.  Should Urban Transit Subsidies Be Reduced? , 2007 .

[15]  A. Mas-Colell.  On a theorem of Schmeidler , 1984 .

[16]  John Pucher,et al.  Urban Travel Behavior as the Outcome of Public Policy: The Example of Modal-Split in Western Europe and North America , 1988 .

[17]  R. Rosenthal.  A class of games possessing pure-strategy Nash equilibria , 1973 .

[18]  André de Palma,et al.  Route choice with heterogeneous drivers and group-specific congestion costs , 1992 .

[19]  D. Pinés,et al.  RIGHT OF WAY AND CONGESTION TOLL , 1987 .

[20]  A. Ellaway,et al.  MEANS OF TRANSPORT AND ONTOLOGICAL SECURITY: DO CARS PROVIDE PSYCHO-SOCIAL BENEFITS TO THEIR USERS? , 2002 .

[22]  André de Palma,et al.  The merits of separating cars and trucks , 2008 .

[23]  Linda Steg,et al.  Car use: lust and must. Instrumental, symbolic and affective motives for car use , 2005 .

[24]  G Autler,et al.  TRANSIT ORIENTED DEVELOPMENT: MOVING FROM RHETORIC TO REALITY , 2002 .

[25]  M. Ivaldi,et al.  Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An Application to Optimal Pricing of Bus Services , 2011 .

[26]  Ian W. H. Parry,et al.  Comparing the Efficiency of Alternative Policies for Reducing Traffic Congestion , 2002 .

[27]  Mette Jensen,et al.  Passion and heart in transport: a sociological analysis on transport behaviour , 1999 .

[28]  Susan L Handy,et al.  Driving by choice or necessity , 2005 .

[29]  A. Rustichini,et al.  Optimal Taxes without Commitment , 1997 .

[30]  John L. Renne,et al.  Socioeconomics of Urban Travel: Evidence from the 2001 NHTS , 2003 .

[31]  J. G. Kretzschmar,et al.  Environmental effects of driving behaviour and congestion related to passenger cars , 2000 .

[32]  Finn E. Kydland,et al.  Rules Rather than Discretion: The Inconsistency of Optimal Plans , 1977, Journal of Political Economy.

[33]  Frédéric Dobruszkes,et al.  The direct cost and geography of Brussels mass transport’s operating delays , 2007 .

[34]  H. Mohring.  Optimization and Scale Economies in Urban Bus Transportation , 1972 .

[35]  Alasdair Cain,et al.  Applicability of Bogotá’s TransMilenio BRT System to the United States , 2006 .

[36]  C. Winston,et al.  The value of automobile travel time: implications for congestion policy , 1998 .

[37]  K. Small,et al.  Product Differentiation on Roads: Constrained Congestion Pricing with Heterogeneous Users , 2003 .

[38]  H. Dittmar,et al.  The new transit town : best practices in transit-oriented development , 2004 .

[39]  Juan Carlos Ana Maria Andres Luis Carlos Echeverry,et al.  The Economics of TransMilenio, a Mass Transit System for Bogota , 2004 .

[40]  L. Steg.  CAR USE: LUST AND MUST , 2001 .

[41]  K. Small,et al.  URBAN SPATIAL STRUCTURE. , 1997 .

[42]  J. Kenworthy,et al.  Patterns of automobile dependence in cities: an international overview of key physical and economic dimensions with some implications for urban policy , 1999 .

[43]  Phil. Goodwin,et al.  The economic costs of road traffic congestion , 2004 .

[44]  André de Palma,et al.  Traffic congestion pricing methodologies and technologies , 2011 .