Modelling some equality and social welfare impacts of road tolling under conditions of traffic uncertainty

Ortega, Alejandro, Vassallo, José Manuel and Pérez, Juan Ignacio (2021) Modelling some equality and social welfare impacts of road tolling under conditions of traffic uncertainty. Research in Transportation Economics, 88, [101110]. (doi:10.1016/j.retrec.2021.101110).

Abstract

This paper studies the combination of tolls that maximises equality in an interurban network with a toll highway and a free parallel single road which could be tolled as well. Equality is defined by a novel indicator which reflexes earlier equality definitions; it measures the proportion of travellers’ willingness to pay not consumed by the monetary transport costs with respect to their willingness to pay. Users are heterogeneous as their values of travel time (VTT) are different. The research also analyses how the VTT distribution affects this optimal combination. The authors conduct several numerical analyses and compare results under two cases: welfare maximization and equality maximization. For the type of network and users selected the results show that the higher the average VTT, the higher the optimal price, and the higher the dispersion (variance) of VTT, the lower the optimal price. Moreover, to optimize equality, the road should remain free. The most equitable scenario worsen high-income users whereas middle-income users benefit from it. More users are better off under the welfare scenario, which also leads to a higher overall surplus. Finally, welfare pricing and equality pricing schemes work oppositely but match for high traffic levels.

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Contributors

Author: Alejandro Ortega

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