Inframarginal Travelers and Transportation Policy

Abstract

Structural models of traffic congestion are used to answer a variety of important, policy-relevant questions. However, existing models typically assume that no travelers are inframarginal with respect to the choice of when to travel; that is, given equilibrium travel times, no travelers strictly prefer their ex-ante departure time to all others. In this paper, I address this shortcoming by incorporating such inframarginal travelers into these models. This change significantly improves these models’ ability to fit the data and changes policy prescriptions. In the case of congestion pricing, it typically changes the optimal toll by at least 25% and significantly worsens the distributional impacts.

Keywords: Structural model, Congestion, Model fit, Calibration, Dynamic, Bottleneck model, Traffic

JEL Classification: R4, H4