Impacts of Transportation External Cost Pricing and Transit Fare Reductions on Household Mode/Route Choices and Environmental Improvements

Abstract

This study explores how transportation external cost pricing and transit fare reductions impact household mode/route choices and environmental improvements in a metropolitan area. A household mode/route choice model and a bilevel model for transportation external cost pricing and transit fare reductions are sequentially constructed. In the first level of bilevel model, the pricing of transportation external costs, including congestion, air pollution, and noise, is measured applying the theory of marginal-cost pricing. The effects of transportation external cost pricing are analyzed in terms of variations in household mode/route choices, increased patronage of rail transit lines and reduced congestion, air pollution, and noise. In the second level of bilevel model, this study explores how to reduce rail transit fares to achieve equivalent benefits of environmental improvement as for the strategy of transportation external cost pricing. The analytical results reveal that, after the implementation of transportation external cost pricing and taxation, the number of commuting households attracted to rail transit lines will increase, and some commuting households may detour to more distant transit stations to avoid high congestion links on surface streets.