Capacity Allocation and Pricing of High Occupancy Toll Lane Systems with Heterogeneous Travelers

In this article, we study the optimal design of High Occupancy Toll (HOT) lanes. In our setup, the traffic authority determines the road capacity allocation between HOT lanes and ordinary lanes, as well as the toll price charged for travelers who use the HOT lanes but do not meet the high-occupancy eligibility criteria. We build a game-theoretic model to analyze the decisions made by travelers with heterogeneous values of time and carpool disutilities, who choose between paying or forming carpools to take the HOT lanes, or taking the ordinary lanes. Travelers' payoffs depend on the congestion cost of the lane that they take, the payment and the carpool disutilities. We provide a complete characterization of travelers' equilibrium strategies and resulting travel times for any capacity allocation and toll price. We also calibrate our model on the California Interstate highway 880 and compute the optimal capacity allocation and toll design.