Marginal Social Cost Pricing on a Transportation Network: Comparison of Second-Best Policies

In this paper we evaluate and compare long-run economic effects of six road-pricing schemes aimed at internalizing social costs of transportation. In order to conduct this analysis, we employ a spatially disaggregated general equilibrium model of a regional economy that incorporates decisions of residents, firms, and developers, integrated with a spatially-disaggregated strategic transportation planning model that features mode, time period, and route choice. The model is calibrated to the greater Washington, DC metropolitan area. We compare two social cost functions - one restricted to congestion alone and another that accounts for other external effects of transportation. We find that when the ultimate policy goal is a reduction in the complete set of motor vehicle externalities, cordon-like policies and variable-toll policies lose some attractiveness compared to policies based primarily on mileage. We also find that full social cost pricing requires very high toll levels and therefore is bound to be controversial.traffic congestion, social cost pricing, land use, welfare analysis, road pricing, general equilibrium, simulation, Washington DC

Urban Transportation Policy: A Guide and Road Map

The main transportation issues facing cities today fall into familiar categories--congestion and public transit. For congestion, there is now a far richer menu of options that are understood, technically feasible, and perhaps politically feasible. One can now contemplate offering roads of different qualities and prices. Many selected road segments are now operated by the private sector. Road pricing is routinely considered in planning exercises, and field experiments have made it more familiar to urban voters. Concerns about environmental effects of urban trucking have resulted in serious interest in tolled truck-only express highways. As for public transit, there is a need for political mechanisms to allow each type of transit to specialize where it is strongest. The spread of “bus rapid transit†has opened new possibilities for providing the advantages of rail transit at lower cost. The prospect of pricing and privatizing highway facilities could reduce the amount of subsidy needed to maintain a healthy transit system. Privately operated public transit is making a comeback in other parts of the world. The single most positive step toward better urban transportation would be to encourage the spread of road pricing. A second step, more speculative because it has not been researched, would be to use more environmentally-friendly road designs that provide needed capacity but at modest speeds, and that would not necessarily serve all vehicles.Transportation policy; Road pricing; Privatization; Product differentiation

Setting the market free: deregulation of the bus industry. 4th Smeed Memorial Lecture, 29th October 1987.

[FIRST PARAGRAPH]Though he was not himself an economist, Reuben Smeed is well known to transport economists as the chairman of a committee which, in the early sixties, examined the use of congestion charges to obtain a rational use of scarce urban road capacity. (1) The Smeed report showed that in the absence of a proper road congestion pricing system there would be an excessive use of the private car, and, by implication, a sub optimum level of use of public transport. Although, to the best of my knowledge, Reuben never turned his mind to the issues of public transport regulation, the ready acceptance of public transport regulation and subsidy as second best proxies for road pricing in the late sixties and seventies was, I believe, founded on the Smeed logic

Urban Sprawl and the Finances of State and Local Governments

Concern over the rate of spatial growth of urban areas has become a significant national political issue and a major development issue in many urban areas. An often cited statistic, typically presented as evidence of sprawl, is that between 1960 and 1990 the urban population in the United States increased by 50 percent while the amount of developed land more than doubled (Benefield et al., 1999).While much has been written about the causes and consequences of sprawl, little attention has been paid to the implications of sprawl for the finances of state and local government. There are at least two possible channels for sprawl to affect the finances of state and local governments. First, if the causes of sprawl include market failures or government policies, there may be a role for governmental corrective action. Second, sprawl may affect the costs of and revenue sources for the public provision of goods and services. This paper considers the potential effects that sprawl might have on the finances of state and local governments and the possible policies that might be adopted to address the causes and consequences of sprawl

Welfare and Distributional Effects of Road Pricing Schemes for Metropolitan Washington, DC

Economists have long advocated congestion pricing as an efficient way of allocating scarce roadway capacity. However, with a few exceptions, congestion tolls are rarely used in practice and strongly opposed by the public and elected officials. Although high implementation costs and privacy issues are alleviated as appropriate technologies are developed, the concerns that congestion pricing will adversely affect low-income travelers remain. In this paper, we use a strategic transportation planning model calibrated for the Washington, DC, metropolitan area to compare the welfare and distributional effects of three pricing schemes: value pricing (HOT lanes), limited congestion pricing, and comprehensive congestion pricing. We find that social welfare gains from HOT lanes amount to three-quarters of those from the comprehensive road pricing. At the same time, a HOT lanes policy turns out to be much more equitable than other road pricing schemes, with all income groups strictly benefiting even before the toll revenue is recycled.traffic congestion, congestion pricing, value pricing, HOT lanes, HOV lanes

Urban Transport Market Theoretical Analysis.

1.The Institute for Transport Studies (ITS) was commissioned by the Department of Transport (DoT), the Association of Metropolitan Authorities (AMA) and the Passenger Transport Executive Group (PTEG) to undertake this project in November 1992. 2.The objectives of this study were: (a)to establish a simple economic model of urban transport operations, based on present policies; (b)to estimate, using the model, the theoretically optimal form of intervention in urban rail under the present policy constraints, and differences between this optimum and current procedures; (c)to investigate how improved procedures might be implemented in practice in the light of the kind of data which are currently available or become available in the course of a Section 56 appraisal and to make suggestions for additional data collection

The changing nature of demand for public transport in Brisbane: state-of-play and future trends

This Working Paper reports on contract research commissioned by the Policy & Planning Unit of the Traffic & Transport Branch of the Brisbane City Council (BCC). Current BCC and Queensland Transport targets for the mode share of PT in Brisbane and the South East Queensland (SEQ) Region call for a substantial increase in PT usage in both absolute and relative terms. In order to assess the appropriateness of those targets, it is necessary to determine: (a) recent trends in Brisbane PT patronage levels; (b) the set of demographic, socio-economic and employment trends which directly or indirectly impact on PT markets; (c) the likely future trends in those factors; and (d) the network supply and technological changes which will impact on the performance of competing modes. Decisions about the strategies and actions needed to bring about the desired PT mode share targets need to be informed by such an analysis. Sections 2, 3 and 4 of this Working Paper address the above issues in turn. Section 5 presents a discussion of the main implications of the findings for future PT demand in Brisbane. The strategies likely to be necessary to achieve the PT mode share targets set by the BCC for the next 10 years, are also discussed at this stage

Competition and Price Dispersion in the U.S. Airline Industry

This papers analyzes dispersion in the prices that an airline charges to different customers on the same route. Such variation in airlines fares is substantial: the expected absolute difference in fares between two of an airline's passengers on a route averages thirty-six percent of the airline's average ticket price on the route. The pattern of price dispersion that we find does not seem to be explained solely by cost differences. Dispersion is higher on more competitive routes, possibly reflecting a pattern of discrimination against customers who are less willing to switch to alternative flights or airlines. We argue that the data support an explanation based on theories of price discrimination in monopolistically competitive industries.