INFRAMARGINAL TRAVELERS AND TRANSPORTATION POLICY

Jonathan Hall

International Economic Review, 2024, vol. 65, issue 3, 1519-1550

Abstract: Structural models of traffic congestion, such as the bottleneck model, are used to answer important, policy‐relevant questions. However, existing models typically assume that no travelers are inframarginal regarding when to travel; that is, given equilibrium travel times, no travelers strictly prefer their ex ante departure time to all others. In this article, I address this shortcoming by incorporating inframarginal travelers into these models. This change significantly improves these models' ability to fit the data and changes policy prescriptions. In the case of congestion pricing, it typically changes the optimal toll by at least 25% and significantly worsens the distributional impacts.

Date: 2024
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