Inside the Queue: Hypercongestion and Road Pricing in a Continuous Time - Continuous Place Model of Traffic Congestion

Abstract

This paper develops a continuous-time - continuous-place economic model of road traffic congestion with a bottleneck, based on car-following theory. The model integrates two archetype congestion technologies used in the economics literature: 'static flow congestion', originating in the works of Pigou, and 'dynamic bottleneck congestion', pioneered by Vickrey. Because a closed-form analytical solution of the formal model does not exist, its behaviour is explored using a simulation model. In a setting with endogenous departure time choice and with a bottleneck along the route, it is shown that 'hypercongestion' can arise as a dynamic - transitional and local - equilibrium phenomenon. Also dynamic toll schedules are explored. It is found that a toll rule based on an intuitive dynamic and space-varying generalization of the standard Pigouvian tax rule can hardly be improved upon. A naive application of a toll schedule based on Vickrey's bottleneck model, in contrast, appears to perform much worse and actually even reduces welfare in the numerical model.

Keywords: congestion, road pricing, dynamic networks, car-following theory

JEL Classification: R41, R48, D62