Impact of Two-Part Pricing Scheme on Social Welfare for Congested Metropolitan Expressway Networks

Abstract

Road pricing has proved to be an effective means of managing traffic demand, reducing the environmental impact of road traffic, and obtaining revenues. The model employed in this paper is based on the social marginal cost economic theory for assessing the total change in social welfare by means of different indicators. This model has the advantage of comparing different road-pricing systems apart from the traditional ones (simple schemes), such as cordon and kilometric toll. In this case a two-part tariffs scheme has been analyzed. The results show that to optimize the current road capacity, the two-part optimal prices must be determined (optimal combination of access toll and kilometric charge). This will allow a higher increase in social welfare. This increase is obtained by internalizing the congestion social cost (reducing deadweight loss) when diminishing demand to an optimum amount. This model has been applied on the expressway networks of the metropolitan area of Barcelona, Spain. Conclusions show that if demand is reduced by 10%, a favorable change in social welfare takes place, which is 96% higher than if demand is reduced by only 5%. However, if demand is reduced by 15%, such change in social welfare increases by only 20% compared with a 10% demand reduction scenario.