Optimal Location-dependent Pricing Policies on Railways and Roads in a Continuous City

Joto, Keigo and Konagane, Joji and Kono, Tatsuhito and Kuwahara, Masao (2020): Optimal Location-dependent Pricing Policies on Railways and Roads in a Continuous City.

Abstract

This paper explores optimal location-dependent but time-invariant peak-load charges on a road and a train in a continuous closed city with bottleneck road congestion and rail overcrowding. In our model, rail and car commuters both choose their departure times, considering their schedule delay costs and dynamically changing transportation costs, and their residential locations. Our theoretical results show that when the bottleneck is located at the fringe of the CBD area (Situation 1), the optimal uniform toll and fares are determined by the difference in price distortions between the train and cars. When the bottleneck on the road is located some distance from the CBD (Situation 2), the optimal uniform toll and fares are represented by price distortions of the cars and train, respectively. Our quantitative results show that, in Situation 1, our toll and fares can achieve 25% of the first-best welfare gains, whereas, in Situation 2, our toll and fares can achieve approximately 30% of the first-best welfare gains.

• Item Type: MPRA Paper
• Language: English
• Keywords: Bottleneck road congestion, Congestion toll, Railway fare, Rail overcrowding
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R48 - Government Pricing and Policy

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