Speed Choice, Car Following Theory and Congestion Tolling

Tinbergen Institute Working Paper No. 2002-102/3

33 Pages Posted: 13 Jan 2003

See all articles by Jan Rouwendal

Jan Rouwendal

VU University Amsterdam - Department of Spatial Economics; Tinbergen Institute

Date Written: September 2002


This paper provides a link between car following theory and the economic theory of road congestion by means of a theory of speed choice. According to this theory speed choice is based on a trade-off between the benefits (shorter travel time) and cost (higher accident risk) of driving faster. Accident risk is related to the distance to the 'leader' and by elaborating this relationship a number of car-following models can be derived from this theory of speed choice. Wit homogeneous traffic, steady state analysis leads to a model that generalizes the conventional Pigou-Knight analysis: It has an endogenous speed choice curve and requires the incorporation of accident risk in the value of travel time. A further generalization of this model to steady states with heterogeneous traffic is possible and leads to the conclusion that first best tolls will in general require differentiation over groups of drivers. Finally a general bottleneck model is discussed that contains Vickrey's (1969) and Verhoef's (2002) versions as special cases. This results in a clarification of Verhoef's finding that implementation of the optimal Vickrey toll can result in a deterioration of welfare.

Keywords: Car following, congestion tolling, traffic speed, traffic heterogeneity, bottleneck model

JEL Classification: R41, R48, D62

Suggested Citation

Rouwendal, Jan, Speed Choice, Car Following Theory and Congestion Tolling (September 2002). Tinbergen Institute Working Paper No. 2002-102/3, Available at SSRN: https://ssrn.com/abstract=336460 or http://dx.doi.org/10.2139/ssrn.336460

Jan Rouwendal (Contact Author)

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA

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