Optimal time for implementing cordon toll pricing scheme in a monocentric city

Abstract

AbstractThis paper proposes an analytical model to address the timing issue of cordon toll pricing in a monocentric city. The proposed model allows an explicit consideration of the interactions among three types of agents in the urban system: (i) the local authority who aims to jointly determine the optimal time for introducing cordon toll pricing scheme, cordon toll location and toll level to maximize social welfare of the urban system; (ii) property developers who seek to determine the intensity of their capital investment in the land market to maximize their own net profit generated from the housing supply; and (iii) households who choose residential locations that maximize their own utility within a budget constraint. The effects of the cordon toll pricing scheme on household's residential location choice and housing market structure in terms of housing price and space are explicitly considered. A comparison of the toll pricing schemes with a fixed and a mobile cordon location over time and the no toll case is carried out. The proposed model is also illustrated in several Chinese cities. Insightful findings are reported on the interactions among cordon toll pricing scheme, urban population size, household income level, toll collection cost, and urban development.