Transit pricing and redistribution of toll revenue with user heterogeneity

Considering user heterogeneity with different values of time (VOTs), traffic equilibrium models are presented to investigate commutes' travel behavior in a bi-modal transportation system with a mass transit parallel to a toll road. The VOTs of individuals are assumed to follow the continuous uniform distribution, and two types of transit fare are discussed when it is equal to the marginal cost or the average cost. Relative change of modal split after transit subsidy from toll revenue is also examined. The results show that with the increase of the standard deviation of VOT, the differences of highway traffic flow with or without transit subsidy will decrease. Furthermore, the total social costs are compared under four different pricing strategies based on efficiency and equity. The results show that the average cost pricing strategy is superior to the marginal cost pricing at the total social cost after toll revenue redistribution. It is also found that, equity will increase as the standard deviation of VOT decreases, if toll revenue is used to subsidy public transportation. Finally, numerical results are used to verify transit average cost with subsidy is a better strategy when the fixed cost is large enough.