Congestion Management: Right Priceby Antti P. Talvitie, World Bank, Washington, United States,
Catharina Sikow, World Bank, Washington, United States,
Document Type: Proceeding Paper
Part of: Pacific Rim TransTech Conference—Volume II: International Ties, Management Systems, Propulsion Technology, Strategic Highway Research Program
Congested city centers have become a nightmare of traffic planners. They propose a variety of measures to overcome the problem: more funds to road construction, tighter parking controls, dedicated bus lines in order to make public transport more attractive, etc. Usually they ignore the pricing of road use which, however, is the easiest way to manage demand, i.e. the traffic volumes. When an appropriate price is set on scarce road space, an acceptable level of congestion and other negative externalities of road use (e.g. pollution and noise) can be reached. The objective of the `right price' or marginal cost pricing is to minimize the total cost of the road sector. In the optimum, road users pay for highway maintenance, capacity expansion, and environmental damage according to the principles of marginal cost pricing. The theoretical solution as well as practical applications from Europe, the USA, and Asia are given.
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