Congestion pricing of multi-modal transportation systems

Abstract.

This paper deals with the pricing and investment decision problem of multi-modal transportation systems in which the congestion is a significant factor in the assessment of system costs. This study approaches this congestion pricing problem with a number of social welfare maximization problems, all of which have the identical structure except financial constraints. One welfare maximization problem examined in this study yields the pricing and investment decision, which can attain the first-best social optimality for multi-modal transportation systems. Other welfare maximization problems show he second-best optimal solutions that can address two policy questions in transportation economics, namely, the cross-subsidy between competing modes and peak-period congestion charges on a single highway link.