Potential of carpool for network traffic management

This study examines the impact of carpool on network traffic in a highly idealized futuristic world, where all travelers are willing to participate in carpool arranged by a Transportation Network Company. We build a parsimonious carpool model that focuses on the trade-off between inconvenience costs and travel cost savings. Underlying the model is a nonlinear bipartite matching problem that seeks to maximize commuters’ welfare. By assuming the congestion effect is negligible, we derive several useful analytical results. When the inconvenience cost is less than the median trip valuation of a rider, the platform could always achieve an almost perfect match while maximizing commuters’ welfare, which corresponds to a 50% reduction in vehicular traffic flow. In the case of perfect match, if there is an even number of travelers, we propose a pricing policy that possesses all desired properties of the Vickrey-Clark-Groves (VCG) policy – a benchmark truthful policy for achieving socially optimal solution – but runs a lower deficit. Otherwise, we show the VCG policy always generates a profit. If the inconvenience cost is too high, the perfect match is no longer socially optimal, but the VCG policy still yields a positive profit. Solutions from numerical experiments generally agree with the analytical results. They also suggest that matching across O-D pairs occurs only when it has a significantly lower inconvenience cost than matching within, an unlikely event in reality. Moreover, when cross O-D matching does become prevalent, it leads to higher vehicle miles travelled, hence worse congestion. Thus, from the point of view of traffic management, cross O-D carpool should not be encouraged.