Papers by Charles Lindsey
Journal of Regional Science, 2007
Skip to Main Content. Wiley Online Library will be disrupted 5 Nov from 10-12 GMT for monthly mai... more Skip to Main Content. Wiley Online Library will be disrupted 5 Nov from 10-12 GMT for monthly maintenance. ... Milan Janic and Roger Stough develop an airport congestion-charging model and apply it to New York's LaGuardia airport. ...
Road pricing has a long and checkered history with many failed attempts interspersed by a small n... more Road pricing has a long and checkered history with many failed attempts interspersed by a small number of successes around the world. A question at the forefront of research and policy is whether the successes and failures hold useful lessons for designing and implementing roadpricing schemes in other countries and cities. Road Congestion Pricing in Europe (RCPE) provides a welcome and informative contribution to the debate.
Production and Operations Management, 2017
This paper analyzes subsidy schemes that are widely used in reducing waiting times for public hea... more This paper analyzes subsidy schemes that are widely used in reducing waiting times for public healthcare service. We assume that public healthcare service has no user fee but an observable delay, while private healthcare service has a fee but no delay. Patients in the public system are given a subsidy s to use private service if their waiting times exceed a predetermined threshold t. We call these subsidy schemes (s, t) policies. As two extreme cases, the (s, t) policy is called an unconditional subsidy scheme if t = 0, and a full subsidy scheme if s is equal to the private service fee. There is a fixed budget constraint so that a scheme with larger s has a larger t. We assess policies using two criteria: total patient cost and serviceability (i.e. the probability of meeting a waiting time target for public service). We prove analytically that, if patients are equally sensitive to delay, a scheme with a smaller subsidy outperforms one with a larger subsidy on both criteria. Thus, the unconditional scheme dominates all other policies. Using empirically derived parameter values from the Hong Kong Cataract Surgery Program, we then compare policies numerically when patients differ in delay sensitivity. Total patient cost is now unimodal in subsidy amount: the unconditional scheme still yields the lowest total patient cost, but the full subsidy scheme can outperform some intermediate policies. Serviceability is unimodal too, and the full subsidy scheme can outperform the unconditional scheme in serviceability when the waiting time target is long.
There is a large operations research literature on public transit system design. An extensive eco... more There is a large operations research literature on public transit system design. An extensive economic literature has also developed on public transit capacity investments, service frequency, and optimal pricing and subsidy policy. These two branches of literature have made significant advances in understanding public transit systems. However, in contrast to the literature on automobile traffic congestion, most of the studies have employed static models that cannot account for travelers' time-of-use decisions and the dynamics of transit congestion and crowding. The time profile of ridership is driven by the trade-off that users face between traveling at peak times and suffering crowding, and avoiding the peak by traveling earlier or later than they would like. A few studies have explored this trade-off using simple microeconomic models that combine trip-scheduling preferences as introduced by Vickrey (1969) with a crowding cost function that describes how utility from travel dec...
Handbooks in Transport, Sep 14, 2007
Transportation researchers have long struggled to find satisfactory ways of describing and analys... more Transportation researchers have long struggled to find satisfactory ways of describing and analysing traffic congestion, as evident from the large number of often competing approaches and models that have been developed. This paper aims to provide a review of the literature on this topic. The paper starts with the modelling of homogeneous traffic flow and congestion on an isolated road under stationary conditions. We set up the supply-demand framework used to characterize equilibrium and optimal travel volumes. Next, an overview of macroscopic and microscopic models of nonstationary traffic flow is given. We then describe how trip timing can be modelled, and discuss the essence of dynamic equilibrium. The paper next reviews the principles of static and dynamic equilibrium on a road network in a deterministic environment, and then identifies equilibrium concepts that account for stochasticity in demand and capacity. Finally, conceptual and practical issues regarding congestion pricing and investment on a network will be addressed. * The authors would like to thank Ken Small, Richard Arnott and André de Palma for stimulating comments on an earlier version of this paper. Any remaining errors, however, are the authors' responsibility alone.
Road pricing has a long and checkered history with many failed attempts interspersed by a small n... more Road pricing has a long and checkered history with many failed attempts interspersed by a small number of successes around the world. A question at the forefront of research and policy is whether the successes and failures hold useful lessons for designing and implementing roadpricing schemes in other countries and cities. Road Congestion Pricing in Europe (RCPE) provides a welcome and informative contribution to the debate.
Research in Transportation Economics, 2020
A literature review reveals that economists have had limited success in promoting economically ef... more A literature review reveals that economists have had limited success in promoting economically efficient transportation and environmental externality policies. Evidence shows that policy makers are more open to using taxes and cap-and-trade systems to combat climate change than levying tolls to manage traffic congestion. Although carbon taxes are too low, and caps on tradable permits too high, to induce significant Greenhouse Gas (GHG) emissions reductions, governments at all levels are starting to implement these instruments, and climate change is now on the international political agenda as the Paris Agreement demonstrates. By contrast, congestion charging is rare. One reason may be that the science of climate change has become virtually impossible to ignore. Another is that GHG concentrations are cumulative, and the consequences of climate change are global, irreversible and potentially catastrophic. Traffic congestion is localized and transient, and more of an inconvenience than a threat to life. Responsibility for transportation policy is also often divided across multiple levels of government. These differences may explain why the use of economic instruments has been more widespread in dealing with climate change than with congestion. 1 INTRODUCTION Economists have influenced policy and practice concerning many topics in a range of fields. 1 Practical problems have even motivated theoretical developments in economics (Crew and Kleindorfer, 2002). Many economists believe that the economics profession has had a major impact on the economy in general. Yet Frey (2006) claims that empirical evidence to support this is scarce, and he quotes a number of famous economists who wrote both for and against the proposition that economists have been influential. A number of scholars think that, in many cases, economists have not had as much impact as they may have anticipated, or hoped. A case in point are externalities which economists have been studying since Pigou (1920). Extensive bodies of work in environmental economics and transportation economics have accumulated since the 1950s. Politicians and policy makers, however, have been slow to adopt economists' advice despite advances in economic science, large increases in the costs of congestion and pollution, and increased recognition of the threat posed by climate change. 1 These include peak-load pricing, capital budgeting and net present value, portfolio selection, econometric forecasting, marginalist principles, Ramsey pricing, the Stand Alone Cost Test, and the use of marginal analysis in legislation (Faulhaber and Baumol, 1988); commercial innovation (Jaffe, 1989); deregulation (Crew and Kleindorfer, 2002); and privatization, central bank independence and pension reform (Kogut and Macpherson, 2011). Economists have also been leaders in formulating macroeconomic policies concerning unemployment and inflation (Appelbaum, 2019).
Transportation Research Part B: Methodological, 2016
The Downs-Thomson paradox (D-T paradox) occurs when expansion of a congested and untolled highway... more The Downs-Thomson paradox (D-T paradox) occurs when expansion of a congested and untolled highway undermines scale economies of a competing transit service, leaving users of both modes worse off. The standard analysis of the D-T paradox is based on several stringent assumptions: fixed total travel demand, perfect substitutability between automobile and transit trips, and no transit crowding. This paper reexamines the paradox when these assumptions are relaxed while retaining the usual assumption that there is no congestion interaction between the modes. It also broadens consideration to alternative transit administration regimes. In the standard treatment the transit operator is obliged to cover its costs. In this paper we also study two other regimes: transit profit maximization, and system-wide welfare maximization with no financing constraint. We examine how the transit system operator responds to highway capacity expansion in each regime, and how this affects welfare for drivers and transit users. We show that in all regimes the full price of transit declines only if the full price of driving falls as well. Thus, drivers are more likely to benefit from highway expansion than transit riders. The D-T paradox cannot occur in the profit maximization or unconstrained welfare maximization regimes. In the traditional self-financing regime transit service deteriorates, but the D-T paradox is not inevitable. Numerical analysis suggests that it can occur only when automobile and transit trips are nearly perfect substitutes.
Economics of Transportation, 2012
Traffic congestion is a bane of modern city life. Transportation economists have long supported r... more Traffic congestion is a bane of modern city life. Transportation economists have long supported road pricing as a tool for controlling congestion and the idea is slowly coming into practice. This paper reviews the theory of congestion pricing and the relationship between optimal congestion tolls and optimal road capacity. It is organized around four questions. Is congestion pricing according to marginal-social-cost principles consistent with covering the costs of road infrastructure? How does road pricing affect optimal road capacity? How does road pricing affect optimal public transportation fares and capacity? Do private toll road operators make socially efficient toll and capacity decisions? The paper concludes with an assessment of long-run trends in travel demand and technology that could alter the evolution of traffic congestion and priorities for road pricing and investment.
Economics of Transportation, 2014
According to the seminal Cost Recovery Theorem the revenues from congestion tolls pay for the cap... more According to the seminal Cost Recovery Theorem the revenues from congestion tolls pay for the capacity costs of an optimal-sized facility if capacity is perfectly divisible, and if user costs and capacity costs have constant scale economies. This paper extends the Theorem to long-run uncertainty about investment costs, user costs, and demand. It proves that if constant scale economies hold at all times and in all states, and if the toll can be varied freely over time and by state, then expected discounted toll revenues cover expected discounted investment costs over a facility's lifetime. If the marginal cost of investment is constant and investment is reversible, then expected cost recovery is also achieved for each investment. Cost recovery is quite sensitive to estimated initial demand, and moderately sensitive to the estimated growth rate of demand. Natural variability in demand can result in substantial surpluses or deficits over a facility's lifetime. 1 The terms "self-financing" and "cost recovery" will be used interchangeably in this paper. 2 Some prominent economists at the time, including Beckmann et al. (1956) and Nelson (1962), had expressed doubts that the goals of efficient usage and cost recovery could be reconciled. Indeed, the tension between the two goals dates back to Jules Dupuit and Arthur Pigou. For a historical review see Lindsey (2006). 2 on (Nijkamp and Ubbels, 1999; Berechman, 2009). Major cost overruns and delays are common for toll roads. In a large international survey, Flyvbjerg et al. (2003) found an average cost escalation of 20.4% for road projects, and 33.8% for bridges and tunnels. 3 Road operations and maintenance costs are also unpredictable. Input costs (e.g. labour, fuel, and material) can vary significantly over time. Natural disasters such as earthquakes and hurricanes cause extensive damage. Climate change affects the frequency and severity of extreme weather, flooding, frost heave, and so on. Traffic volumes are also a major source of uncertainty. In another large international survey, Flyvbjerg et al. (2006) found that, for half of road projects, actual traffic deviated from forecasted traffic by more than ±20%. 4 Traffic volumes are affected by a host of unpredictable factors: project completion time, economic growth rates, fuel prices, land-use developments, construction of competing or complementary roads, environmental concerns that curb automobile usage, changing preferences with respect to housing and mode choice, and so on. 5 Despite improvements in data collection and econometric methods, forecasts have not become more accurate over time (Flyvbjerg et al., 2006; Transportation Research Board, 2006). Optimistic demand projections tend to be the norm for toll road projects. Bain (2009) identifies several reasons: lower-than-expected travel time savings; over-estimation of drivers' values of time 6 and corresponding willingness to pay tolls; and errors in designing complex tolling schemes in which tolls vary by vehicle type, section of road, and time of day. Technology is a third factor that can affect cost recovery over a road's lifetime. Traffic management system techniques such as ramp metering help to regulate demand. Incident Management Systems reduce the duration of traffic incidents. Advanced Traveler Information Systems notify motorists about traffic conditions. Road vehicles are becoming smaller, smarter, and safer. Vehicle collision avoidance systems, lane-departure warning systems, driver fatigue monitoring systems, heads-up displays, and improved braking systems are reducing the 3 Other studies of cost overruns include Odeck (2004) and Berechman and Chen (2011). 4 Other studies of bad forecasts include Prozzi et al. (2009) and Williams-Derry (2011). 5 Lindsey (2012) discusses the future evolution of road travel demand. 6 See Hensher and Goodwin (2004). 7 As evidence, capacity values in the US Highway Capacity Manual have increased over time (Elefteriadou, 2004). 8 Mohring and Harwitz (1962, pp. 84-86). 9 With homogeneity of degree zero, the cost of usage does not change if usage and capacity are scaled proportionally. 10 The conditions for self-financing are actually less restrictive than stated because capacity can be defined in such a way that condition (c) is always satisfied. A more general version of the theorem states that the ratio of toll revenues to capacity costs equals the local elasticity of the capacity cost function.
Transportation Science, 2012
Information about traffic conditions has traditionally been conveyed to drivers via radio, variab... more Information about traffic conditions has traditionally been conveyed to drivers via radio, variable message signs, and, more recently, the Internet and advanced traveler information systems. This has spurred research on how travelers respond to information, how much they are willing to pay for it, and how much they are likely to benefit from it collectively. In this paper, we analyze the decisions of drivers on whether to acquire information and which routes to take on simple congested road networks. Drivers vary in their degrees of risk aversion with respect to travel time. Four information regimes are considered: no information, free information (publicly available at no cost), costly information (publicly available for a fee), and private information (available free to single individuals). Private information is shown to be individually more valuable than either free or costly information while the benefits from free and costly information cannot be ranked in general. Free or cos...
A proposal has been made to build a new tunnel under the Scheldt river near the centre of Antwerp... more A proposal has been made to build a new tunnel under the Scheldt river near the centre of Antwerp in order to relieve traffic congestion on the ring road and in an existing tunnel. The new tunnel is expected to cost more than €1 billion, and tolls have been suggested to help finance construction and to manage demand. This paper conducts a preliminary cost-benefit analysis of a new tunnel and three alternative tolling schemes, and compares them with a donothing scenario and an option to toll the existing tunnel without building a new one. The analysis is performed using a model that was recently developed as part of the European-Union funded REVENUE project. The two tunnels are treated as imperfect substitutes, and a multi-year accounting framework is adopted that accounts for emissions, accidents and noise externalities, road damage, revenues accruing to the national and regional governments from existing transport user charges, and the salvage value of the new tunnel. With the base-case parameter values it is found that building the tunnel is worthwhile with all three tolling regimes and yields a higher benefit than not building the tunnel and tolling the old one. Nevertheless, the net benefit from building the tunnel differs appreciably between tolling regimes, and it is sensitive to the value assumed for the marginal cost of public funds.
SSRN Electronic Journal, 2012
ABSTRACT This paper studies the efficiency of two subsidy schemes widely used in health-care syst... more ABSTRACT This paper studies the efficiency of two subsidy schemes widely used in health-care systems: unconditional and conditional. Unconditional schemes partially subsidize customers seeking private care without pre-requirement, whereas conditional schemes fully subsidize those who have waited sufficiently long in the public system. Public service is assumed to suffer queuing delay whereas private service is provided without delay. For each subsidy scheme we consider two information regimes: no information and full information, according to whether or not customers observe real-time delay information. We then derive customers' equilibrium choices between private and public systems and investigate the optimal design for each subsidy scheme. We find that although providing customers with delay information improves social welfare, it increases demand sensitivity to the waiting time requirement, resulting in either a deficit or a surplus for the health-care budget. The relative efficiency of the two subsidy schemes also depends on the information regime and the size of the public fund. With no information, there exists a threshold fund level, below which the unconditional subsidy scheme outperforms the conditional scheme, and above which the conditional scheme prevails. With full information, the unconditional subsidy scheme is always superior. Finally, we demonstrate that social welfare can be significantly improved by changing the current waiting-time-based subsidy scheme into a virtual-waiting-time-based subsidy scheme.
SSRN Electronic Journal, 2014
This paper investigates the existence and uniqueness of equilibrium in the Vickrey bottleneck mod... more This paper investigates the existence and uniqueness of equilibrium in the Vickrey bottleneck model when each user controls a positive fraction of total traffic. Users simultaneously choose departure schedules for their vehicle fleets. Each user internalizes the congestion cost that each of its vehicles imposes on other vehicles in its fleet. We establish three results. First, a pure strategy Nash equilibrium (PSNE) may not exist. Second, if a PSNE does exist, identical users may incur appreciably different equilibrium costs. Finally, a multiplicity of PSNE can exist in which no queuing occurs but departures begin earlier or later than in the system optimum. The order in which users depart can be suboptimal as well. Nevertheless, by internalizing self-imposed congestion costs individual users can realize much, and possibly all, of the potential cost savings from either centralized traffic control or time-varying congestion tolls.
SSRN Electronic Journal, 2010
In most dynamic traffic congestion models, congestion tolls must vary continuously over time to a... more In most dynamic traffic congestion models, congestion tolls must vary continuously over time to achieve the full optimum. This is also the case in Vickrey's (1969) 'bottleneck model'. To date, the closest approximations of this ideal in practice have so-called 'step tolls', in which the toll takes on different values over discrete time intervals, but is constant within each interval. Given the prevalence of step tolling schemes they have received surprisingly little attention in the literature. This paper compares two step-toll schemes that have been studied using the bottleneck model by Arnott, de Palma and Lindsey (1990) and Laih (1994). It also proposes a third scheme in which late in the rush hour drivers slow down or stop just before reaching a tolling point, and wait until the toll is lowered from one step to the next step. Such behaviour has indeed been observed in reality. Analytical derivations and numerical modelling show that the three tolling schemes have different optimal toll schedules and reduce total social costs by different percentages. These differences persist even in the limit as the number of steps approaches infinity. Braking lowers the welfare gain from tolling by 14% to 21% in the numerical example. Therefore, preventing or limiting braking seems important in designing step-toll systems.
Short excerpts of these working papers may be quoted without explicit permission provided that fu... more Short excerpts of these working papers may be quoted without explicit permission provided that full credit is given to the source.
Most traffic congestion models assume that agents make trip-timing decisions independently and re... more Most traffic congestion models assume that agents make trip-timing decisions independently and receive payoffs at the origin and destination that do not depend on whether other agents are present. We depart from this paradigm by considering a variant of Vickrey's bottleneck model of the morning commute in which individuals live as couples and value time at home more when together than when alone. We show that the costs of congestion can be higher than for a comparable population of individuals living alone. The costs can be even higher if spouses collaborate with each other when choosing their departure times. To calibrate the model we estimate trip-timing preferences for married and unmarried men and women in the Greater Paris region.
The United States and Canada lag Europe and Singapore in implementing road pricing on a large sca... more The United States and Canada lag Europe and Singapore in implementing road pricing on a large scale. But the two countries have shown interest in tolling roads as a way to curb congestion and to generate revenues. The US is funding congestion pricing demonstration projects through its Value Pricing Pilot Program, and Canada has examined new ways to charge for road use and to finance road construction and maintenance. This paper reviews the current state of road pricing and funding in the two countries. The prospects for extensive road pricing appear to be brighter in the US than in Canada.
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Papers by Charles Lindsey