A competitive system with transit and highway: Revisiting the political feasibility of road pricing

This paper analyzes the political feasibility of road pricing. In a monocentric city, we assume that every morning, there are a fixed number of commuters going to work by car or by bus. A flat toll is levied on commuters who drive to work and the toll revenues are redistributed to all commuters or bus riders only, or not at all. If more than half commuters support or benefit from the pricing scheme, it is considered politically feasible, and vice versa. We show that no one supports implementing road pricing if the toll revenues are not returned, and that the two revenue redistribution measures can produce the identical modal split and departure pattern, but their politically feasible toll intervals are different. Furthermore, if commuters without cars are the majority, they will benefit from the pricing scheme while commuters with cars suffer, regardless of the redistribution measures. However, all commuters may benefit from the pricing scheme when commuters with cars account for an overwhelming majority. This research provides a method for the government to evaluate under what conditions implementing road pricing is politically feasible.