Congestion tolling in the bottleneck model with heterogeneous values of time

• Published in: Transportation research. Part B: methodological Vol. 45; no. 1; pp. 60 - 78
• Main Authors: van den Berg, Vincent, Verhoef, Erik T.
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 2011; Elsevier
• Series: Transportation Research Part B: Methodological
• Subjects: Applied sciences; Bottleneck model; Congestion; Congestion pricing; Congestion pricing Bottleneck model Heterogeneity Value of time Second-best pricing; Exact sciences and technology; Externalities; Gain; Ground, air and sea transportation, marine construction; Heterogeneity; Policies; Road transportation and traffic; Second-best pricing; Transport; Transportation; Transportation planning, management and economics; Value of time; D62; Heterogeneity; R48; Value of time; H23; Bottleneck model; Second-best pricing; Congestion pricing; L11; R41; Bottleneck; Sensitivity analysis; Time; Modeling; Pricing; Numerical simulation; Road traffic; Toll; Value analysis; Traffic congestion
• ISSN: 0191-2615; 1879-2367
• DOI: 10.1016/j.trb.2010.04.003

When analysing the effects of transport policies it is important to adequately control for heterogeneity: previous studies note that ignoring heterogeneity biases the estimated welfare effects of tolling. This paper examines the effects of tolling, in a bottleneck model, with a continuously distributed value of time. With homogeneous users, first-best public tolling has no effect on prices. With heterogeneity it does: low values of time lose, and high values of time gain. The average congestion externality decreases with the heterogeneity in the value of time. Consequently, the welfare gain of first-best tolling also decreases. The more heterogeneous the value of time is, the lower the relative efficiency of a public pay-lane. This finding contrasts with the previous literature. Earlier studies, using static flow congestion, conclude that the relative efficiency increases with this type of heterogeneity. With more heterogeneity in the value of time, the relative efficiency of a private pay-lane is also lower, while that of a public time-invariant toll is higher. Our results suggest that the welfare gains of different tolling schemes are affected differently by heterogeneity. Further, the impact of heterogeneity on the effects of a policy also depends on the type of congestion considered.