Reward and Coarse Toll in Competitive System with Two Modes

The morning congestion problem has been an important society issue. It is necessary to alleviate traffic congestion on rush hours. Dynamic tolls have been proposed to solve the congestion problem on a road with bottleneck. Compared fine toll and uniform toll, a coarse toll is easier to implement and operate in rush hours. In this paper, a congestion problem between a residential area and the CBD has been considered. There have two transport modes including automobile and railroad. Automobile users have to suffer the queue when the road has a bottleneck. Some commuters prefer to travel by railroad because of its convenience and lower cost. It users do not have to pay the schedule delay cost. However, congestion pricing is a negative incentive and travellers’ public acceptability of such a measure is typically low. Giving positive incentives is likely to have little resistance, while similar results may be expected. Reward can be regarded as a potential of positive financial incentives to solve traffic congestion. We mainly talk about two different policies on road and railroad. Coarse toll has been levied on the road with bottleneck. A reward has been implemented on the railroad. The reward comes from the coarse toll revenue which has been levied on the road, and it is allocated towards the commuters who travel by railroad. Two types of railroad fare have been considered: when it is set equal to the marginal cost and when it is set equal to average cost. These models allow us to show that toll policy to be more efficient as long as toll revenue is directed towards public transport when the railroad fare is equal to average cost.