Delayer Pays Principle: Examining Congestion Pricing with Compensation

David Levinson and Peter Rafferty

No 200407, Working Papers from University of Minnesota: Nexus Research Group

Abstract: Despite its virtues, congestion pricing has yet to be widely adopted. This paper explores the issues of equity and use of toll revenue and several possible alternatives. The equity and efficiency problems of conventional (uncompensated) congestion pricing are outlined. Then, several alternatives are discussed and developed. A new compensation mechanism is developed, called the delayer pays principle. This principle ensures that those who arecause delay to others pay a toll to compensate those who are delayed. We evaluate the effectiveness of this idea by simulating alternative tolling approaches and evaluating the results across several measures, including delay, social cost, consumer surplus, and equity. Different tolling approaches can satisfy widely varying policy objectives, thus this principle is applicable in diverse situations. Such a system is viable and can eliminate some common hurdles of congestion pricing while remaining revenue neutral.

JEL-codes: D10 D8 R41 R48 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published in International Journal of Transport Economics 31:3 295-311

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http://hdl.handle.net/11299/179916 First version, 2007 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:nex:wpaper:delayerpays

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