Carpooling with Heterogeneous Users in the Bottleneck Model

Tinbergen Institute Discussion Paper 2018-054/VIII

40 Pages Posted: 19 Jun 2018

See all articles by Xiaojuan Yu

Xiaojuan Yu

VU University Amsterdam

Vincent A.C. van den Berg

VU University Amsterdam; Tinbergen Institute

Erik T. Verhoef

VU University Amsterdam - Department of Spatial Economics; Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

Date Written: June 15, 2018

Abstract

When drivers opt for carpooling, road capacity will be freed up, and this will reduce congestion. Therefore, carpooling is interesting for policy makers as a possible solution to congestion. We investigate the effects of carpooling in a dynamic equilibrium model of congestion, which captures various dimensions of heterogeneity: heterogeneity in preference for carpooling, "ratio heterogeneity" between the values of time and the values of schedule delay, and "proportional heterogeneity" that scales all values equally. We investigate three policy scenarios: no-toll, first-best pricing, and subsidization of carpooling. The optimal second-best subsidy equals each type’s heterogeneous marginal external benefit (MEB) of switching to carpooling. If such differentiation is impossible, the third-best subsidy is a weighted average of the MEBs, where the weights depend on the number of each type and their sensitivity to the subsidy. In our numerical example, we find that when increasing the degree of "ratio heterogeneity", the relative efficiency of the second-best subsidization first increases and then falls with the degree of heterogeneity and L type carpoolers benefit more than H type carpoolers. However, when increasing the degree of "proportional heterogeneity", H type users benefit more than L types for both solo drivers and carpoolers. Moreover, the relative efficiency of the second-best subsidization decreases throughout.

Keywords: Carpooling, Heterogeneity, Bottleneck Model, Welfare Effects, Distributional Effects

JEL Classification: D62, H23, R41, R48

Suggested Citation

Yu, Xiaojuan and van den Berg, Vincent A.C. and Verhoef, Erik T., Carpooling with Heterogeneous Users in the Bottleneck Model (June 15, 2018). Tinbergen Institute Discussion Paper 2018-054/VIII, Available at SSRN: https://ssrn.com/abstract=3197242 or http://dx.doi.org/10.2139/ssrn.3197242

Xiaojuan Yu (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Vincent A.C. van den Berg

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

HOME PAGE: http://www.feweb.vu.nl/nl/afdelingen-en-instituten/spatial-economics/staff/v-berg/index.asp

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Erik T. Verhoef

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31 020 4446094 (Phone)
+31 020 4446004 (Fax)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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