Ring road investment, cordon tolling, and urban spatial structure: Formulation and a case study

Zhi-Chun Li, Li Cheng and André de Palma ()
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André de Palma: Université de Cergy-Pontoise, THEMA

No 2023-07, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Ring roads, as candidate cordon locations, provide an advantageous condition for implementing cordon tolling schemes. This paper presents a methodology for investigating the ring road investment and cordon tolling problems in a congested ring-radial city. A two-dimensional urban system equilibrium for a ring-radial city is first formulated, in which interactions among stakeholders, including the authorities, property developers, households and commuters, are explicitly considered. Two social welfare maximization models for optimizing the ring road investment and cordon tolling schemes, a short-sighted and a far-sighted one, are then proposed. In the short-sighted model, the ring road investment decision is first made, and then the cordon tolling scheme is optimized based on the determined ring road locations as candidate cordons. However, in the far-sighted model, a simultaneous decision of the ring road investment and cordon tolling is made. The proposed models explicitly incorporate the estimation of the intra-area travel. The case study applied to the city network of Chengdu China shows that ring road investment and cordon tolling can reshape the urban spatial structure as a result of the tug-of-war between the dispersion effects due to ring road investment and the concentration effects due to cordon tolling. There is a large difference in the optimal solutions of the far-sighted model and the short-sighted model (e.g., optimal number of cordons). The former is closer to the social optimum than the latter. The optimal multi-cordon tolling scheme outperforms the optimal single-cordon tolling scheme in terms of the social welfare. However, the gap between them is trivial. Ignoring the household residential relocation behavior in the models leads to underestimates of total cordon toll revenue and social welfare gains.

Keywords: Ring-radial city; ring road investment; cordon tolling; urban spatial structure; urban system equilibrium; social welfare. (search for similar items in EconPapers)
JEL-codes: R13 R14 R41 R42 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-tre and nep-ure
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