An economic model for vehicle ownership quota and usage restriction policy analysis.

Abstract

Rationing policies, including vehicle ownership quota and vehicle usage restrictions, have been implemented in several megaregions to address congestion and other negative transportation externalities. However, no model is available in the literature that allows direct comparison of these rationing policies. To bridge this gap, this study develops an analytical framework for analyzing and comparing transportation rationing policies, which consists of a mathematical model of joint household vehicle ownership and usage decisions and welfare analysis methods based on compensating variation and consumer surplus. Under the assumptions of homogenous users and single time period, this study finds that vehicle usage rationing performs better when relatively small percentages of users (i.e. low rationing ratio) are rationed off the roads and when induced demand resulting from congestion mitigation is low. When the amount of induced demand exceeds a certain level, it is shown analytically that vehicle usage restrictions will always cause welfare losses. When the policy goal is to reduce vehicle travel by a large portion (i.e. high rationing ratio), the net social benefits of vehicle ownership quota rationing policy become more obvious. The optimal rationing ratios for both rationing policies can be determined by the model, and are influenced by network congestion and congestibility. A comparison with pricing policy is also provided to illustrate their difference under various conditions. Various policy implications, as well as future research directions, are also discussed.