Tradable Permits to Manage Urban Mobility: Market Design and Experimental Implementation

Abstract

Congestion levels have grown substantially in recent years, while the traditional economic response to congestion -road pricing -remains politically infeasible in most locations. Tradable permits are likely to be a more viable alternative, because they do not require a net financial flow from road users to the government. It is therefore the right moment to design and empirically test tradable permit schemes for managing urban mobility. This paper presents and empirically tests a complete design of a market for tradable permits, both in terms of the conceptual set-up of the market as well as its technical implementation. The design is evaluated against a number of criteria, including: transparency and containment of transaction costs, stability of permit prices in relation to the dynamic equilibrium on the mobility market and the prevention of undesirable speculation and fraud. We present evidence of the empirical functioning of this market, using the results of a conducted lab-in-the-field experiment with virtual mobility behaviour and real financial incentives. * We thank the audiences of the 2018 ITEA conference in Hong Kong and of the spatial economics seminar at the VU Amsterdam for useful comments.

Exploring the feasibility of tradable credits for congestion management

“…Furthermore, the tradable credit scheme in Dogterom et al's experiment was somewhat simplified since they used fixed price levels. Brands et al (2019) did use dynamic prices in their lab experiment on tradable parking permits and found that most choices were made in a rational way, which indicates that they understood the scheme. This sample is probably also not representative of the average car user or citizen since the participants were recruited from a former peak hour rewarding project, which consists of frequent car users who are interested in these kinds of projects.…”

“…The effect of transaction costs on the way the market functions has been studied (Nie 2012) but it is still rather unclear how potential users perceive the hassle and how this affects their acceptability level. Brands et al (2019) report that a majority of their respondents (strongly) agreed with the statement: 'participating in the experiment took little time or effort', which suggests that the transaction costs are relatively low. In their experiment, participants were asked to make a choice every working day, for two weeks.…”

A Roadmap to Nextgen Aircraft Control for Last Mile Delivery Drones

“…Permit schemes have received growing attention in the academic literature. Permit's decentralized nature brings advantages over centralized approaches [11]. In the context of LMDD, the airspace is the resource of interest.…”

“…In view of this, we propose a TPM that serves as a guideline to nextgen aircraft control for LMDD. Related schemes have been proposed [11], [12], [13], [14]. However, our approach raises the novel challenge of cooperation and competition in a much more realistic scenario.…”

An Analysis on Tradable Permit Models for Last-Mile Delivery Drones

“…Permit schemes has received growing attention in nowadays academic studies. Permit's decentralized nature brings advantages over centralized approaches [12]. In the context of LMD, we consider the airspace as the resource of interest.…”