Abstract:
This paper investigates the potential welfare gains resulting from variable parking
fees in the presence of heterogeneous agents. We begin by defining a modified
linear city model with two lots located at separate distances from a central business
district, and two types of agents with heterogeneous values of time. Agents
maximize utility by minimizing transit costs, which include parameters dependent
and independent of value of time. Simulation is used to model how various
specifications affect the average travel costs, focusing on contrast between uniform
pricing and variable pricing. We conclude by discussing the conditions
which create a net welfare gain in light of a pricing gradient.
