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CONGESTION PRICING WITH AN EXOGENOUSLY IMPOSED SPEED LIMIT

W.P. O'DEA
International Journal of Transport Economics / Rivista internazionale di economia dei trasporti
Vol. 28, No. 2 (JUNE 2001), pp. 229-248
Published by: Accademia Editoriale
Stable URL: http://www.jstor.org/stable/42747597
Page Count: 20
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CONGESTION PRICING WITH AN EXOGENOUSLY IMPOSED SPEED LIMIT
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Abstract

In this paper, we modify the standard flow congestion model to include a maximum speed limit (SMAX) which is imposed exogenously either by the technical limitations of motor vehicles or for safety reasons. With the imposition of a speed limit, the speed-flow curve becomes horizontal as long as the traffic flow is lower than the flow corresponding to SMAX, FL. Because the speed flow curve has a horizontal segment, the marginal cost (MC) curve will also be horizontal (and equal to average cost (AC)) as long as the traffic flow is less than or equal to FL. At FL, the MC curve will have a discontinuity. When the traffic flow exceeds FL, the MC curve will again be positively sloped and will lie above the AC curve. If the demand schedule intersects the MC curve along its horizontal segment, the optimal flow can be achieved with no congestion charge. If the demand schedule shifts along the horizontal segment, shifts in demand will result in a change in the optimal traffic flow but no change in the speed at which traffic moves or the optimal congestion charge. If a shift in the demand schedule results in a movement along the discontinuous segment, the shift will not cause the optimal traffic flow or travel speed to change but will cause a change in the optimal congestion charge. In the flow congestion model without an exogenously imposed speed limit, any shift of the demand schedule will cause the optimal values of the traffic flow, the congestion charge and speed to change. When the optimal traffic flow exceeds FL, the standard model again applies. We consider a numerical example which indicates that at 65 mph the horizontal segment of the MC curve is long enough to rule out the need for congestion charges on all but the most heavily traveled highways.

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