Optimal Pricing in Urban Expressway

A welfare economic approach is applied to investigate some implications of optimal pricing in urban expressway where two different groups of users are supposed to exist. On the assumption of a specified demand function, following implications are shown; (1) optimal prices must be such that the diversion ratios are the same and (2) the price rates must be set equal each other, where the price rate means the proportion of the price to the average user benefit. In connection with the results, the elasticity of the demand with respect to price is measured in Osaka area of Hanshin Expressway, where two different levels of price are flatly set for users according to the characteristics of their cars.