A smart market for passenger road transport (SMPRT) congestion: An application of computational mechanism design

Abstract

To control and price negative externalities in passenger road transport, we develop an innovative and integrated computational agent based economics (ACE) model to simulate a market oriented "cap" and trade system. (i) First, there is a computational assessment of a digitized road network model of the real world congestion hot spot to determine the "cap" of the system in terms of vehicle volumes at which traffic efficiency deteriorates and the environmental externalities take off exponentially. (ii) Road users submit bids with the market clearing price at the fixed "cap" supply of travel slots in a given time slice (peak hour) being determined by an electronic sealed bid uniform price Dutch auction. (iii) Cross-sectional demand data on car users who traverse the cordon area is used to model and calibrate the heterogeneous bid submission behaviour in order to construct the inverse demand function and demand elasticities. (iv) The willingness to pay approach with heterogeneous value of time is contrasted with the generalized cost approach to pricing congestion with homogenous value of travel time. JEL Classification: R41, R48, C99, D44, H41Keywords: Congestion charging; Negative externalities; Agent based computational auction design; "Cap" and trade smart market; Willingness to pay; Cross sectional demand analysis *Tel.: +44 1206 872742; fax: +44 (0)1206 872724 E-mail address: scher@essex.ac.uk Acknowledgements:We are grateful to Foresight Directorate of the UK Office of Science and Technology in the Department of Trade and Industry (DTI) for financing this project and to Miles Yarrington for project management. We also thank the Gateshead Metropolitan Borough Council for the use of their micro transport model for central Gateshead. This has been used entirely for purposes of research. We are grateful to Frank Kelly, John Urry and Andrew Scurry for their comments. Our particular thanks go to the referee, John Ledyard, for his significant technical corrections and high calibre input. We remain responsible for all errors.

Design and evaluation of road pricing: state-of-the-art and methodological advances

“…• Linear, log-linear and translog econometric models employing micro-data and, possibly, inequality (Gini, Theil's index) measures [129] and nonparametric methods [130] to evaluate distributional effects, • Discrete choice models, like those based on count data (e.g., Poisson and negative binomial) regression techniques [383], binomial and multinomial logit [4,51,162,400], nested logit [122,183]), conditional logit [389], rankordered logit [56], ordered-response probit [143], mixed logit [49,270,326,337] and Generalized Extreme Value (GEV) with correlated randomutility error terms [429], • Heuristic acceptability models [320], • Strategic niche management (SNM) approaches [173], • Microscopic (and, possibly, mesoscopic) network models for simulating traffic and users' responses to road pricing and other management and control measures [2,96,212,262], which may be integrated with discrete choice models, and • Agent-based computational models of travelers' behavior and interactions [29,167,240,427].…”

“…However, only a few studies have simultaneously considered some of these interactions in the design process, in terms of either the bilateral relationships between macro-level (especially, environmental) effects and travel (and location) choices [57,178,223,311,332,418], or the endogenous changes in time value perceptions [88,240]. The holistic treatment of these interactions should take into account the inter-personal as well as the intrapersonal variability of perceptions and attitudes, together with the behavioral and macro-level effects over a 'predictable' time horizon.…”

Survey of Technologies for the Implementation of National‐scale Road User Charging

“…This pricing model is similar to the those used by low-cost airlines now operating in Europe. Alternatively, each user may bid for one of a limited number of slots, as proposed by the Foresight project (2007, Markose et al).…”

Multi-Agent Transport Simulations and Economic Evaluation

“…The approach described in this paper is meant to evaluate/appraise approaches that are designed by other means. There are other approaches, such as by Markose et al (2007) or Zhang and Levinson (2007), which concentrate on finding optimal designs, using agent-based approaches on the supply side. The emphasis of the present paper, in contrast, is on the travellers' behavioural realism, which we intend to improve much further in the near future.…”