Public or private? Optimal organization for incentive-based travel demand management

Abstract

Incentive-Based Travel Demand Management (IBTDM) strategies have received more attention in recent years as they are more appealing to commuters than penalty-based strategies and thus result in less public aversion. In IBTDM, fully time-variant positive incentives are endowed to the traveling public to encourage off-peak trips. We theoretically demonstrate the effectiveness of IBTDM in managing morning commuters with elastic demand based on Vickrey's bottleneck model. Due to the decentralization of IBTDM, incentive providers are no longer limited to public organizations, as private organizations can also administrate IBTDM programs. Therefore, from the perspective of public and private organizations, maximizing social surplus and private profit can be treated as objective functions. In addition, IBTDM is usually not mandatory but voluntary. Thus, we also considered the constraint of penetration rate. We found that when commuters are relatively sensitive to changes in their actual travel costs, a low penetration rate and a small incentive budget are enough for IBTDM to reach an optimal state (for both public and private administrators), and an excessive budget actually creates negative effects. Compared with public organizations, incentive schemes administrated by private organizations are a more lightweight strategy. However, public organizations are overwhelmingly dominant in the case of high market penetration and low traveler sensitivity. Therefore, one of the most effective modes of operation is to have private organizations implement IBTDM in the early stages of promotion, and then all private-owned businesses would be integrated into public organizations when they reach a certain scale.