road congestion and pricing Flashcards
definition of road congestion
loss of speed when more cars are using a given road segment
how is congestion measured as
measured in terms of travel delay, the extra amount time it takes to travel one mile.
comapred to free-flow conditions.
avg travel time = 1/speed
travel delay
1/speed - 1 free flow speed
what was the avg delay in england in 2016
45.9 per vehicle mile
how much did congestion cost England in 2018
8 bn
what are the assumptions of congestion
e.g. what is V
- V = traffic volume (quantity of vehicles per unit of time that travel on a road)
- To measure congestion assume a decreasing relation between traffic volume and speed
- So the time taken to move a KM will increase due to an increase in traffic volume
- The road is assumed to be 1km long
what is the argument of road pricing
- focus on pricing which will maximise welfare
- first best = there should be no cap on the price-setting
- second best = there are other roads which should be taken into consideration when setting a toll
if a road is not priced optimally, there will often be overuse of the road.
- too many cars, so the cost to society will be great
define the aggregate benefit of trips
d(v) is the willingness to pay for an additional trio
- decreasing in V –> reffered to as the inverse demand fucntion
- V = the number of individuals that decide to take the trip
- Do d(V), is what the Nth individual is willing to pay given that there are V number of individuals the road.
why is the demand curve downward sloping
- everyone has a value placed on a car trip some care for it (commuters) and others not (shoppers)
- individuals by their valuation(decreasing): The highest valuation individual is will to pay the most a dmax .
what is included in the cost function?
how is the time cost function calculated?
- c(V) = resource cost + time cost
- External cost will be ignored for now
• 𝑇(𝑉)=𝑔+ℎ⋅𝑉
• Multiply travel time by the monetary value of time ρ(£/h),to obtain time cost in money terms
• R = monetary cost of travel
- • g = free-flow traval time, travel time under optimal confitions
at equ: • Everyone is happy with what they are doing benefit > cost for a given individual at this point if they are travelling, and cost>benefit for a given individual if they are not travelling
what is marginal external cost in terms of trips
congestion element
• Its an extra driver will lead to an increase in congestion which everyone has to pay for
• Private user cost will be increasing
analyse the no toll equilibrium
- Moving down the d(V) curve, where V is the amount of people are travelling, increase in one more car will lead to someone valuing the traffic less
- We will be focusing on d(V) and c(V) so the equ will be d(V) = c(V)
why is pricning introduced to roads
- Problem: too many trips on a road, excessive congestion
* However, the government can’t stop people from driving (discrimination)
If charging a toll on the road is good, what is the result?
- This leads to the marginal external cost = optimal toll
- So as a result genrealized price of the equal the social cost
- This will make users internalize the external cost of congestion
how would toll impact the deadweight loss to society from congestion
- A toll is equal to the marginal external cost to make c(V) equal d(V)
- Purpose of the Toll is to eliminate deadweight loss from excessive congestion
empirical evidence supporting tolls
Courture et al. (2016) (US cities)
• Data is based on large urban in the US (100 largest metro statistical areas)
• Information comes from travel surveys
49billion is a welafare gain, as a result of the toll charge
