Optimal urban transport pricing with congestion and economies of density

The paper analyses the impact of economies of density on the characteristics of an urban transport system under optimal pricing conditions. Optimal pricing rules are derived for a transport system where bus and car modes are available for peak and offpeak trips. Both modes contribute to congestion. Each demand level for bus trips requires a minimal supply of bus-kilometres. Optimal bus supply exceeds this minimum only when waiting time reductions due to increased service frequency, outweigh congestion costs and bus supply costs (measured at the marginal cost of public funds). An empirical analysis for Brussels and London shows that taking account of economies of density modestly increases the welfare gain from optimising transport prices. Optimal public transport prices are lower when economies of density are taken into account, while optimal car prices are not strongly affected. In case car prices are fixed at the reference level, very low or zero public transport prices produce small welfare gains in some cases.transport; congestion; public transport

Pricing externalities from passenger transportation in Mexico city

The Mexico City Metropolitan Area has been suffering severely from transportation externalities such as accidents, air pollution, and traffic congestion. This study examines pricing instruments to reduce these externalities using an analytical and numerical model. The study shows that the optimal levels of a gasoline tax and a congestion toll on automobiles could generate social benefits, measured in terms of welfare gain, of US$132 and US$109 per capita, respectively, through the reduction of externalities. The largest component of the welfare gains comes from reduced congestion, followed by local air pollution reduction. The optimal toll and tax would, however, double the cost of driving and could be politically sensitive. Still, more than half of those welfare gains could be obtained through a more modest tax or toll, equivalent to $1 per gallon of gasoline. The welfare gains from reforming the pricing of public transportation are small relative to those from reforming the taxation of automobiles. Although the choice among travel modes depends on specific circumstances, in the absence of road travel pricing that accounts for externalities, there will be potential for higher investment in roads relative to mass transit. Given the rapidly increasing demand for transportation infrastructure in Mexico City, careful efforts should be made to include the full social costs of travel in evaluating alternative infrastructure investments.Transport Economics Policy&Planning,Roads&Highways,Energy Production and Transportation,Transport and Environment,Transport in Urban Areas

Washington START Transportation Model

The document describes the Washington START transportation simulation model. In particular, it provides information about the model structure, the equilibrium concept, and the data used to calibrate the model. It also briefly describes the reference scenario and the elasticity analysis. Finally, the document discusses past and potential future applications and possible directions for model extensions.transportation simulation, policy analysis, general equilibrium, travel demand, transportation network, mode of transportation

Should Urban Transit Subsidies Be Reduced?

This paper derives intuitive and empirically useful formulas for the optimal pricing of passenger transit and for the welfare effects of adjusting current fare subsidies, for peak and off-peak urban rail and bus systems. The formulas are implemented based on a detailed estimation of parameter values for the metropolitan areas of Washington (D.C.), Los Angeles, and London. Our analysis accounts for congestion, pollution, and accident externalities from automobiles and from transit vehicles; scale economies in transit supply; costs of accessing and waiting for transit service as well as service crowding costs; and agency adjustment of transit frequency, vehicle size, and route network to induced changes in demand for passenger miles. The results support the efficiency case for the large fare subsidies currently applying across mode, period, and city. In almost all cases, fare subsidies of 50% or more of operating costs are welfare improving at the margin, and this finding is robust to alternative assumptions and parameters.Transit subsidies; Scale economies; Traffic congestion; Welfare effects

Regulating TNCs: Should Uber and Lyft Set Their Own Rules?

We evaluate the impact of three proposed regulations of transportation network companies (TNCs) like Uber, Lyft and Didi: (1) a minimum wage for drivers, (2) a cap on the number of drivers or vehicles, and (3) a per-trip congestion tax. The impact is assessed using a queuing theoretic equilibrium model which incorporates the stochastic dynamics of the app-based ride-hailing matching platform, the ride prices and driver wages established by the platform, and the incentives of passengers and drivers. We show that a floor placed under driver earnings pushes the ride-hailing platform to hire more drivers and offer more rides, at the same time that passengers enjoy faster rides and lower total cost, while platform rents are reduced. Contrary to standard economic theory, enforcing a minimum wage for drivers benefits both drivers and passengers, and promotes the efficiency of the entire system. This surprising outcome holds for almost all model parameters, and it occurs because the wage floors curbs TNC labor market power. In contrast to a wage floor, imposing a cap on the number of vehicles hurts drivers, because the platform reaps all the benefits of limiting supply. The congestion tax has the expected impact: fares increase, wages and platform revenue decrease. We also construct variants of the model to briefly discuss platform subsidy, platform competition, and autonomous vehicles

You Can't Get There From Here: Government Failure in U.S. Transportation

Consumers, firms, and government spend $1.3 trillion on transportation, which accounts for roughly 17 percent of U.S. GDP. Transportation also absorbs about$1.2 trillion in travelers' and shippers' time--a valuable commodity excluded from GDP. Ttransportation policy is an important means for government to exert its influence on the economy. From regulating international air fares to providng bus service to owning and operating the roads, the government's presence in the U.S. transportation sector is pervasive. This paper argues, however, that the government's extensive involvement in transportation is undesirable and that it should greatly reduce its role in all aspects of transportation. By repeatedly failing to enact efficient policies to allocate transportation resources and by rigidly pursuing policies that have undermined the efficiency of every transportation mode and the welfare of most users--especially those with the lowest incomes---policymakers have assured that government failures are compromising the performance of the U.S. transportation sector far more than market failures. By ridding the transportaton sector of most observable government failures and by allowing innovation and state-of-the-art technology to flourish free of government interference, the private sector can vastly improve transportation and thereby advance our standard of living. The only real uncertainty is how long policymakers will resist change.

Social Equity Impacts of Congestion Management Strategies

This white paper examines the social equity impacts of various congestion management strategies. The paper includes a comprehensive list of 30 congestion management strategies and a discussion of equity implications related to each strategy. The authors analyze existing literature and incorporate findings from 12 expert interviews from academic, non-governmental organization (NGO), public, and private sector respondents to strengthen results and fill gaps in understanding. The literature review applies the Spatial – Temporal – Economic – Physiological – Social (STEPS) Equity Framework (Shaheen et al., 2017) to identify impacts and classify whether social equity barriers are reduced, exacerbated, or both by a particular congestion mitigation measure. The congestion management strategies discussed are grouped into six main categories, including: 1) pricing, 2) parking and curb policies, 3) operational strategies, 4) infrastructure changes, 5) transportation services and strategies, and 6) conventional taxation. The findings show that the social equity impacts of certain congestion management strategies are not well understood, at present, and further empirical research is needed. Congestion mitigation measures have the potential to affect travel costs, commute times, housing, and accessibility in ways that are distinctly positive or negative for different populations. For these reasons, social equity implications of congestion management strategies should be understood and mitigated for in planning and implementation of these strategies

Should Urban Transit Subsidies Be Reduced?

This paper derives intuitive and empirically useful formulas for the optimal pricing of passenger transit and for the welfare effects of adjusting current fare subsidies, for peak and off-peak urban rail and bus systems. The formulas are implemented based on a detailed estimation of parameter values for the metropolitan areas of Washington (D.C.), Los Angeles, and London. Our analysis accounts for congestion, pollution, and accident externalities from automobiles and from transit vehicles; scale economies in transit supply; costs of accessing and waiting for transit service as well as service crowding costs; and agency adjustment of transit frequency, vehicle size, and route network to induced changes in demand for passenger miles. The results support the efficiency case for the large fare subsidies currently applied across mode, period, and city. In almost all cases, fare subsidies of 50 percent or more of operating costs are welfare improving at the margin, and this finding is robust to alternative assumptions and parameters.transit subsidies, scale economies, traffic congestion, welfare effects

European Railway Comparisons: Final Report

The Institute for Transport Studies (ITS), University of Leeds and the British Railways Board (BRB) carried out a major comparative study of Western European railways in the late 1970s (BRB and University of Leeds, 1979). Follow-up work was carried out by ITS financed by the Social Science Research Council and reported by Nash (1985). It was deaded to revive this work at ITS for a number of reasons: It is over ten years since the last set of comparisons (for 1981) were made at ITS and therefore a review of the changes in costs and productivity may be timely. There has been a number of technical developments that make the use of statistical cost analysis more promising. These developments include the use of more flexible functional forms such as the translog, and the development of comprehensive total factor productivity indices (see, for example, Dodgson, 1985 and, more recently, Hensher and Waters, 1993). There is increasing interest in the organisational structure of railway industries as a result of the 1988 Transport Act in Sweden, the EC directive 91/4-40 and the publication of proposals for privatising British Rail in July 1992 (see, for example, ECMT, 1993). Given the explosion in information technology, there were some hopes that data availability would have improved. (Continues..

Time Differential Pricing Model of Urban Rail Transit Considering Passenger Exchange Coefficient

Passenger exchange coefficient is a significant factor which has great impact on the pricing model of urban rail transit. This paper introduces passenger exchange coefficient into a bi-level programming model with time differential pricing for urban rail transit by analysing variation regularity of passenger flow characteristics. Meanwhile, exchange cost coefficient is also considered as a restrictive factor in the pricing model. The improved particle swarm optimisation algorithm (IPSO) was applied to solve the model, and simulation results show that the proposed improved pricing model can effectively realise stratification of fares for different time periods with different routes. Taking Line 2 and Line 8 of the Beijing rail transit network as an example, the simulation result shows that passenger flows of Line 2 and Line 8 in peak hours decreased by 9.94% and 19.48% and therefore increased by 32.23% and 44.96% in off-peak hours, respectively. The case study reveals that dispersing passenger flows by means of fare adjustment can effectively drop peak load and increase off-peak load. The time differential pricing model of urban rail transit proposed in this paper has great influences on dispersing passenger flow and ensures safety operation of urban rail transit. It is also a valuable reference for other metropolitan rail transit operating companies