Beyond Standard Zonal Congestion Pricing: A Detailed Impact Analysis

Abstract

This study formulates three fundamental extensions of the standard optimal road use analysis: (1) considering fuel and emissions as variable costs, (2) maximizing the social welfare inside and outside the congestion zone simultaneously, and (3) accounting for time-of-day travel demand variations. Using Fresno, California, as case study, I found several interesting results. (1) Although emissions costs are small relative to other variable travel costs, their impacts on the analysis are significant, especially during off-peak periods; for example, in the case study doubling emissions costs triples the optimal (although relatively small) welfare gain from a congestion charge. (2) Without spillover effects consideration, the analysis overestimates the optimal toll rate significantly and can even lead to a total social welfare loss, relative to no-charge conditions. (3) Policymakers should avoid applying a flat daily charge, which can even reduce system performance in off-peak hours.