Congestion Pricing Economic Models and international experience

1. Congestion PricingEconomic Models and international experience Aya Aboudina, PhD Student Civil Engineering Dept, University of Toronto 1

2. Outline Introduction Motivation Microeconomic foundations Congestion Pricing Models Static vs. dynamic pricing Profit-maximizing vs. social-welfare maximizing pricing Social-welfare maximizing pricing Congestion pricing models: a conclusion International Experience and Research Vision 2

3. Motivation Users/consumers should pay the full cost of whatever they consume Otherwise, they are subsidized Therefore, they unnecessarily consume more to the detriment of all i.e. �Tragedy of the Commons� Garrett Hardin, journal Science in 1968 3 Add to Motivation: Boosting traffic flow up to capacity Reducing trip delay through departure time reschedulingAdd to Motivation: Boosting traffic flow up to capacity Reducing trip delay through departure time rescheduling

4. Tragedy of the Commons 4 A dilemma arising from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource even when it is clear that it is not in anyone's long-term interest for this to happen. Examples: Overgrazing Congestion Criticized for promoting privatization Used here to encourage �control�