Efficiency and equity of redistribution of toll revenue with user heterogeneity

Abstract

With the explicit consideration of user heterogeneity, i.e. each user has a different value of time (VOT), this paper examines system efficiency and social equity of redistribution of toll revenue in a bi-mode transportation service system. Three mode choice equilibrium models are built without road congesting pricing, with road congesting pricing and with the combination of road congesting pricing and transit subsidies, respectively. With mild assumptions, we prove that the number of highway users decreases and the total social cost of service system increases with subsidy share, respectively. Numerical analysis indicates that there exists an optimal subsidy share so as to minimize the social inequity measured by Gini coefficient. Furthermore, with the increase of user heterogeneity, the Gini coefficient is larger and the total travel cost is lower.