Managing network mobility with tradable credits

A system of tradable travel credits is explored in a general network with homogeneous travelers. A social planner is assumed to initially distribute a certain number of travel credits to all eligible travelers, and then there are link-specific charges to travelers using that link. Free trading of credits among travelers is assumed. For a given credit distribution and credit charging scheme, the existence of a unique equilibrium link flow pattern is demonstrated with either fixed or elastic demand. It can be obtained by solving a standard traffic equilibrium model subject to a total credit consumption constraint. The credit price at equilibrium in the trading market is also conditionally unique. The appropriate distribution of credits among travelers and correct selection of link-specific rates is shown to lead to the most desirable network flow patterns in a revenue-neutral manner. Social optimum, Pareto-improving and revenue-neutral, and side-constrained traffic flow patterns are investigated.

Research highlights
► A tradable credit scheme is proposed for mobility management in general networks with either fixed or elastic demand.
► The traffic equilibrium and the credit trading market equilibrium are formulated together as a simple convex nonlinear program with linear constraints.
► The properties of the equilibrium particularly regarding the uniqueness of credit price are made clear.
► It is shown the tradable credit scheme plays essentially the same role as conventional road pricing in attaining and sustaining various desirable network traffic flow patterns.
► The various advantages of the tradable credit scheme are illuminated in a convincing manner.