Paper Resume

Congestion pricing, transit subsidies and dedicated bus lanes: Efcient and
practical solutions to congestion
Leonardo J. Basso, Cristian Angelo Guevara, Antonio Gschwender, Marcelo Fuster
Civil Engineering Department, Universidad de Chile, Santiago, Chile

Introduction
In most cities people have a choice between using a car or public transportation, and these two
modes share road capacity and thus interact with each other. This happens directly on the road,
when vehicles are in motion, or when passengers are boarding and alighting in bus stops. In other
words, buses delay cars and cars delay buses. The possible policies we consider are: congestion
pricing,transit subsidies and dedicated bus lanes. Then, the scenarios we analyze are made of
combinations of these policies
Equation
Basic equation of modal utility for car (a), bus (b) and bicycle (c)

Consumer surplus

Social welfare

Model Scenario
Scenario 1: Self-nancing transit, no congestion pricing, mixed- trafc (base case).
Scenario 2: Transit subsidies, no congestion pricing, mixed-trafc
Scenario 3: Transit subsidies, congestion pricing, mixed-trafc.
Scenario 4: Transit subsidies paid for by congestion pricing revenues, mixed-trafc.
Scenario 5: Self-nancing transit, no congestion pricing, dedicated bus lanes
Scenario 6: Transit subsidies, no congestion pricing, dedicated bus lanes.
Scenario 7: Transit subsidies, congestion pricing, dedicated bus lanes.

Scenario 8: Transit subsidies paid for by congestion pricing revenues, dedicated bus lanes
Result

Conclusion
1. Dedicated bus lanes is the best stand-alone policy possible, as it achieves and by far larger
social welfare than transit subsidization or congestion pricing
2. Congestion pricing is marginally better than subsidization in terms of social welfare but has a
negative impact in consumer surplus