Congestion pricing with an unpriced time period and with heterogeneous user groups

Congestion pricing has received increased attention from planners and policy analysts as a cost-effective strategy to optimize the economic efficiency of congestible facilities like roads. In the real-world setting, the implementation of congestion pricing often involves heterogeneous user groups, unpriced alternatives for some users or user groups, and/or policy constraints such as the toll revenue collected must be at least equal to the costs of implementation. This dissertation focuses on a category of congestion pricing regimes (called "the representative regime" in the text) that has an unpriced time period, heterogeneous user groups, and/or has to meet certain policy constraints. Internet-based search and a literature review indicate that the representative regime has not been well studied however, the regime has great relevance to planners and policy analysts interested in congestion pricing. This dissertation reviews existing literature related to the regime, develops a model of general form for the regime, devises numerical cases about the regime, and examines the economic properties of the regime based on the case findings.This dissertation finds that treating users as homogeneous may cause biased estimations of the economic properties of the representative regime. But results of different cases in this dissertation show that there is no silver bullet regarding how to differentiate users in the regime. For planners and policy analysts interested in congestion pricing, nevertheless, it is probably worthwhile to categorize users into two user groups: truckers and motorists, focusing on user group differences in value of time, demand elasticity, commute distance, and road space requirements.This dissertation also finds that as long as heterogeneous users are categorized into reasonable user groups and group-specific data are used in relevant models, the economic efficiency of the representative regime based on the models will remain stable whether first-, second-, or third-best tolls are charged. Ignoring user group differences in value of time, demand elasticity, road space requirement, and commute distance all affect the economic properties of the representative regime disclosed by the models. Relatively speaking, ignoring the difference in road space requirement results in fewer biases in the estimated indicator values of the regime.This dissertation argues that offering unpriced alternatives and/or meeting certain policy constraints---such as exempting certain user groups all the time---reduces the economic efficiency of the representative regime. But the reduction does not necessarily remove most of the optimal value of the regime. For instance, the case results of this dissertation indicate that exempting all truckers from paying any tolls all the time only reduces 7--10% of the maximum economic efficiency of the representative regime that the first-best tolls can achieve. Of course, the overall economic efficiency ignores the fact that different numbers of users by group could be priced off or on the toll road in question. Results of different cases in this dissertation will allow planners and policy analysts to know better who would be priced off and on, and how the first-, second-, or third-best tolls would affect who would be priced off and on.Despite the above findings, this dissertation could still be improved upon in the future. Possible improvements relate to the limitations of the numerical approach developed and employed, the assumptions made in the cases and policy scenarios constructed, and the data used to construct these cases and policy scenarios.