  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.
