Modeling tradable credit scheme in managing bottleneck congestion with consideration of transaction cost

Abstract

As an alternative to congestion pricing, the tradable credit scheme has been proposed and demonstrated in managing commute congestion with appealing properties (e.g., revenue neutrality). Most of the existing TCS studies, however, assumed a perfect trading market of credits with no transaction cost, which is unrealistic. Considering non-negligible transaction cost (e.g., brokerage fee in a trading platform), we demonstrate that the TCS with time-varying charge rate always outperform the do-nothing case. To achieve the system optimum (SO) condition, we derive piece-wise toll schemes for commuters. The break-even point of the trading platform is also examined. The above results are first obtained for homogeneous commuters and then extended to the case of heterogeneous ones with various values of time.

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