Equitable Demand Management Strategies for Different Classes of Customers

This paper deals with the problem of finding equitable demand management strategies in congested systems with the presence of several classes of customers. Although the conclusions of the paper can be easily adapted to any market-based demand management philosophy, we mainly focus on congestion pricing, starting from a purely market-based economic approach. In this approach, the congestion toll paid by a customer should be set equal to the external cost he imposes on other customers. When demand consists of customers belonging to different classes, application of this principle may lead to tolls that are unaffordable for customers of one or more of these classes. This raises important issues of fairness. In this paper we discuss several alternative approaches where considerations of equitability and affordability are incorporated into the process of assessing congestion prices. An application to the determination of the appropriate landing fees at a congested airport serves as an illustration of the proposed approaches.