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

Tinbergen Institute Discussion Paper 2019-007/VIII

18 Pages Posted: 4 Feb 2019

See all articles by Devi Brands

Devi Brands

VU University Amsterdam

Erik T. Verhoef

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

Jasper Knockaert

affiliation not provided to SSRN

Paul Koster

VU University Amsterdam - Department of Spatial Economics

Date Written: January 27, 2019

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.

Keywords: Mobility Credits, Tradable Credits Scheme, Permit Experiment, Permit Market

JEL Classification: R41, R48, H23, Q58

Suggested Citation

Brands, Devi and Verhoef, Erik T. and Knockaert, Jasper and Koster, Paul, Tradable Permits to Manage Urban Mobility: Market Design and Experimental Implementation (January 27, 2019). Tinbergen Institute Discussion Paper 2019-007/VIII, Available at SSRN: https://ssrn.com/abstract=3323642 or http://dx.doi.org/10.2139/ssrn.3323642

Devi Brands (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
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

Jasper Knockaert

affiliation not provided to SSRN

Paul Koster

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
51
Abstract Views
318
rank
423,521
PlumX Metrics