Pricing and logit-based mode choice models of a transit and highway system with elastic demand

The objective of this paper is to enhance the insights into transport pricing mechanism and the corresponding mode choice behavior in a simple bi-modal transportation system with elastic demand. This system comprises a mass transit parallel to a bottleneck-constrained highway between a residential area and a workplace. We derive and compare three pricing schemes: the arbitrarily fixed pricing, the first-best pricing for a social optimum of the system, and the second-best pricing in the case of incapability of road toll. It is shown that the first-best pricing requires to implement a road toll and a transit fare simultaneously, and the optimal transit fare for the second-best solution should be set to be a weighted sum of the marginal external costs between auto and transit commuters. A numerical example is presented to illustrate how the pricing policies affect the demand implementation, the mode choice behavior and the efficiency of the whole transportation system. (C) 2002 Elsevier Science B.V. All rights reserved.