Congestion Tolling for Mixed Urban Freight and Passenger Traffic

Abstract

This paper investigates the welfare effects of optimal tolling on urban traffic congestion, in a bottleneck model, with mixed freight and passenger users. The users’ marginal utility of time is considered to be varying with time. Under both no-toll equilibrium and socially optimal tolling, the users are found to sort their arrival time according to the increasing rates of marginal utility at the destination. The optimal toll that maximizes social welfare does not change each user's indirect utilit y relative to the no-toll equilibrium, but completely removes the queue, which also removes the barrier of freight carriers to accept congestion pricing by relating their marginal utilities directly to the toll. When the toll is equally rebated, the proposed social optimal tolling is a Pareto improvement relative to the no-toll equilibrium. Those more productive users also suffer more in both no-toll equilibrium and optimal tolling, which indicates that a differentiated redistribution of toll revenues could be an incentive to improve productivity.