Pricing of transportation systems under non-homogeneous values of time

Under the traditional assumptions of a homogeneous value of time, congestion pricing theory suggests that a transportation system would operate at its optimal level when users are charged for the externality they create onto other users of the system. Although congestion pricing models have demonstrated that users can increase their welfare through congestion pricing policies, its implementation in the U.S. has been virtually non-existent. Our research identifies two significant flaws with the assumptions of the traditional congestion pricing model, and provides an alternative model relaxing these assumptions. The first flaw we identify is that the traditional model assumes all users to value trip costs equivalently, therefore, the welfare implications on different classes of users becomes difficult to assess. Secondly, most models limit congestion pricing to the myopic examination of automobile congestion alone. However, to evaluate the true impacts of congestion pricing, one has to examine the whole spectrum of alternatives available to users and determine how traffic would be distributed after pricing schemes are implemented. The alternative model provides the capability of better addressing the impacts of congestion pricing, and provides new insights and directions as to how to improve a transportation system.; The developed integrated model consists of an individual user choice based on individual preferences such as trip worth and value of time. The model evaluates the alternatives presented by the whole transportation infrastructure, and users are assigned to trips in different modes and routes depending on their individual preferences. One of the main benefits of this model is that it allows transportation agencies to determine how different classes of users are affected by different pricing schemes. Since the model identifies the choice of transportation of the different classes, redistribution techniques can be implemented into the different modes in a manner that is “fair” to those affected, and beneficial to the society at large.