Market design for tradable mobility credits

Tradable mobility credit (TMC) schemes are an approach to travel demand management that have received significant attention in recent years as a promising means to mitigate the adverse environmental, economic, and societal effects of urban traffic congestion. This paper proposes and analyzes alternative market models for a TMC system - focusing on market design aspects such as allocation/expiration of credits, rules governing trading, transaction fees, and regulator intervention - and develops a methodology to explicitly model the dis-aggregate behavior of individuals within the market. Extensive simulation experiments are conducted within a combined mode and departure-time context for the morning commute problem to compare the performance of the alternative designs relative to congestion pricing and a no-control scenario.The results indicate that small, fixed transaction fees can effectively mitigate undesirable speculation in the market without a significant loss in efficiency (total welfare) whereas proportional transaction fees are less effective, both in terms of efficiency and in avoiding undesirable speculation. Further, an allocation of credits in continuous time can be beneficial in dealing with non-recurrent events and avoiding concentrated trading activity. In the presence of income effects, despite small, fixed transaction fees, the TMC system yields a marginally higher social welfare than congestion pricing while attaining revenue neutrality. Moreover, it is more robust in the presence of forecasting errors and non-recurrent events due to the adaptiveness of the market. Finally, as expected, the TMC scheme is more equitable (when revenues from congestion pricing are not redistributed) although it is not guaranteed to be Pareto-improving when credits are distributed equally.

Automated summary

Tradable mobility credit (TMC) schemes are an effective approach to mitigate urban traffic congestion and its adverse effects. This paper proposes and analyzes alternative market models for the TMC system, with a focus on market design aspects and individual behavior modeling. Simulation experiments have shown that small, fixed transaction fees can effectively reduce undesirable speculation in the market without significant efficiency loss. Continuous time allocation of credits and the adaptiveness of the market enhance the system's robustness in handling non-recurrent events and forecasting errors. The TMC scheme is more equitable and can achieve higher social welfare than congestion pricing when considering income effects.