Tradable permits to manage urban mobility: Market design and experimental implementation

Brands, Devi; Verhoef, Erik T.; Knockaert, Jasper; Koster, Paul

doi:10.1016/j.tra.2020.04.008

Cited by 18 publications

(33 citation statements)

References 19 publications

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“…Akamatsu and Wada (2017) reached similar conclusions (see also Shirmohammadi et al (2013)), demonstrating the equivalence of the tradable permit system and a congestion pricing system when the road manager has perfect information of transportation demands. On the behavior side, several stated preference studies have highlighted the importance of key behavioral economics and cognitive psychology factors towards TMC Dogterom et al (2017) (see also Brands et al (2020) for an interesting realworld experiment with tradable credits).…”

Section: Review Of Literaturementioning

confidence: 99%

“…Finally, we study the effect of transaction costs. The introduction of transaction costs can reduce undesired speculations (Brands et al, 2020), but it diverts the system from the desired equilibrium regardless of its magnitude (Bao et al, 2014;Nie, 2012). In this study, we define behaviors of selling tokens which would be bought back later as 'undesired speculation' and investigate the effect of two different forms of transaction cost, including 1) a fixed fee for every transaction and 2) a fee per unit of trading credit.…”

Section: Experiments Designmentioning

confidence: 99%

“…For instance, how should the allocation and expiration of tokens be designed? What rules should govern trading behavior in the market so as to avoid undesirable speculation and trading (see Brands et al (2020) for more on this), and yet ensure efficiency and revenue neutrality? How should the regulator intervene in the market in the presence of special or non-recurrent events?…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Analysis and Design of Markets for Tradable MobilityCredit Schemes

Chen¹,

Seshadri²,

Azevedo³

et al. 2021

Preprint

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Tradable mobility credit (TMC) schemes are an approach to travel demand management that have received significant attention in the transportation domain in recent years as a promising means to mitigate the adverse environmental, economic and social effects of urban traffic congestion. In TMC schemes, a regulator provides an initial endowment of mobility credits (or tokens) to all potential travelers. In order to use the transportation system, travelers need to spend a certain amount of tokens (tariff) that could vary with their choice of mode, route, departure time etc. The tokens can be bought and sold in a market that is managed by and operated by a regulator at a price that is dynamically determined by the demand and supply of tokens. This paper proposes and analyzes alternative market models for a TMC system (focusing on market design aspects such as allocation/expiration of credits, rules governing trading, transaction costs, regulator intervention, price dynamics), and develops a methodology to explicitly model the dis-aggregate behavior of individuals within the market. Extensive simulation experiments are conducted within a departure time context for the morning commute problem to

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Section: Review Of Literaturementioning

confidence: 99%

Section: Experiments Designmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Analysis and Design of Markets for Tradable MobilityCredit Schemes

Chen¹,

Seshadri²,

Azevedo³

et al. 2021

Preprint

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show abstract

“…By using a virtual currency to compare routes and times of day, transaction costs can be further reduced (De Palma et al 2018). Importantly, experiments suggest that individuals understand the permit system and adapt their behavior accordingly when confronted with tradable mobility right options (Brands et al 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Rational Drivers and the Choice between Congestion Tolls and Tradeable Permits: A Political Economy Model

2021

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People who anticipate the introduction of a policy can adapt their behavior, perhaps in ways that make the policy ineffective and exacerbate the problem to be addressed. This paper develops a political economy model to study strategic behavior related to the introduction of congestion policies, focusing on tradeable driving permits and congestion tolls. We have the following results. First, anticipatory behavior after the policies are announced but prior to their introduction may make both congestion policies welfare-reducing. Second, drivers will oppose the policies even when they receive all permits for free, or toll revenues are distributed to drivers only. As a consequence, strategic behavior makes it more difficult to get a political majority to support both congestion policies. Third, in an infinite horizon setting, tradable permits are superior to congestion tolls in that they avoid strategic behavior once the system is implemented. In contrast, with congestion tolls the steady-state equilibrium implies continuing strategic behavior. Drivers will always strictly prefer a permit system over congestion tolls as long as they receive a sufficient share of the permits for free.

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“…However, recent technological trends in vehicles connectivity and mobile internet could lead to transaction costs close to zero. Recently, Brands et al (2020) designed and implemented a lab-in-the-field tradable permit market where online trading made transaction costs small enough to prevent these from being a significant distorting element. In this paper, we assume the existence of that kind of market design, and therefore will ignore transaction costs.…”

Section: Introductionmentioning

confidence: 99%

Tradable mobility permits in a monocentric city with pre-existing labor taxation: a general equilibrium perspective

Candia¹,

Verhoef

2021

SSRN Journal

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This paper considers tradable mobility permit schemes in a monocentric city with a distorting labor tax. Three schemes are analyzed, that differ by the (spatial) allocation of permits to households. Numerical results show that the scheme with permits allocated in proportion to labor supply reaches about 99.9% of the first-best welfare, being the only welfare-increasing scheme for higher levels of labor tax, and being more efficient than the second-best tax for levels of the labor tax of 20% or higher. This is due to the welfare gains of incentivizing labor supply, which has an effect similar to the revenue recycling effect of conventional road pricing, but that can be better optimized by the social planner by exploiting spatial differentiation. When permits are allocated on the basis of households' residential distance from the CBD, a spatially differentiated component leads to higher welfare levels than with the third scheme considered, which is the allocation in proportion to households' kilometers traveled.

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Tradable permits to manage urban mobility: Market design and experimental implementation

Cited by 18 publications

References 19 publications

Analysis and Design of Markets for Tradable MobilityCredit Schemes

Analysis and Design of Markets for Tradable MobilityCredit Schemes

Rational Drivers and the Choice between Congestion Tolls and Tradeable Permits: A Political Economy Model

Tradable mobility permits in a monocentric city with pre-existing labor taxation: a general equilibrium perspective

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