A Stochastic Model of Congestion Caused by Speed Differences

The authors study interaction on a two-lane road between the trips of two types of drivers who differ by their desired speeds. The difference in desired speeds causes congestion, because slow vehicles force fast vehicles to reduce their speed. Results for this type of congestion with respect to tolling are very different from those of the classic Pigou-Knight model, where the marginal external costs are an increasing function of the number of road users. In our model we find the opposite result: the marginal external costs of slow vehicles are a decreasing function of the number of slow vehicles. This leads to rather different policy recommendations. © The London School of Economics and the University of Bath 2002