The urban toll revenue recycling : what is the optimal share distributed towards mass transit system?

Abstract : The paper examines the question of the redistribution of toll revenue as seen in a bottleneck congestion model. Our objective is to analyse the impact of this redistribution on total cost and on modal split between railroad and road. Following Tabuchi's two-mode model (J. Urban Econ. 34 (1993) 414), we integrate a redistribution of toll revenue between mass transit and public budget. This analysis is new in literature relative to queing models (Arnott et al. 1993). A very interesting result is shown in our model : in a pricing regime with a …ne toll and a mass transit fare based on the average cost, the optimal redistribution towards mass transit users allows to obtain an equilibrium similar to the benchmark optimal situation with marginal cost fare.