Cost effective peak traffic. Benefits of road capacity, congestion pricing and public transport improvement

Optimum transport policy is analysed with reference to commuting from a suburb to a city center. An objective function that can be interpreted as «social surplus» is used to define the optimum policy. Policy instruments are congestion charge on cars and fare, frequency and capacity per departure for public transport, and solutions are constrained to equilibria. Benefits of infrastructure measures are estimated and compared for different «first best» and «second best» solutions. The difficulty of compensating for the absence of congestion charging by other means is clearly evident. Within the same framework we also confront the issue of «good» and «vicious» circles and Downs-Thomson´s hypothesis on the futility of increasing road capacity . «Good» and «vicious» circles are clearly present in our model. The results with respect to impacts of increased road capacity are that only in very special situations will the benefits be zero or negative.