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Step by Step: Revisiting Step Tolling in the Bottleneck Model

C. Robin Lindsey, Vincent A.C. van den Berg and Erik Teodoor Verhoef ()
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C. Robin Lindsey: University of British Columbia, Canada

No 10-118/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In most dynamic traffic congestion models, congestion tolls must vary continuously over time to achieve the full optimum. This is also the case in Vickrey's (1969) 'bottleneck model'. To date, the closest approximations of this ideal in practice have so-called 'step tolls', in which the toll takes on different values over discrete time intervals, but is constant within each interval. Given the prevalence of step tolling schemes they have received surprisingly little attention in the literature. This paper compares two step-toll schemes that have been studied using the bottleneck model by Arnott, de Palma and Lindsey (1990) and Laih (1994). It also proposes a third scheme in which late in the rush hour drivers slow down or stop just before reaching a tolling point, and wait until the toll is lowered from one step to the next step. Such behaviour has indeed been observed in reality. Analytical derivations and numerical modelling show that the three tolling schemes have different optimal toll schedules and reduce total social costs by different percentages. These differences persist even in the limit as the number of steps approaches infinity. Braking lowers the welfare gain from tolling by 14% to 21% in the numerical example. Therefore, preventing or limiting braking seems important in designing step-toll systems.

Keywords: Congestion pricing; step tolls; bottleneck model; Vickrey model; departure time choice; braking (search for similar items in EconPapers)
JEL-codes: D62 R41 R48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp and nep-ure
Date: 2010-11-30, Revised 2012-08-02
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