AMELIORATING CONGESTION BY INCOME REDISTRIBUTION

This paper focuses on the effects of income inequality on congestion. In particular, we show how a redistribution that increases inequality can reduce congestion. Moreover, even a redistribution from the poor to the rich can make everyone better off. Heretofore the literature studied Pareto-optimal redistribution in the context of relative status, envy, and altruism. Pareto-optimal redistribution has also been considered from an insurance perspective. Varian (1980), for instance, argues that redistributive taxation may be desirable from an ex-ante point of view if individuals are risk averse. Broadly speaking, these theories favor equalizing incomes. Our analysis of the effect of inequality can be applied to many situations. We can examine the circumstances that would make individuals in a rich community favor low-income housing. The analysis this offers a partial explanation for why communities are not as homogeneous as Tiebout's (1956) model would predict. We can also apply the model to understand the benefits of allowing immigration of the poor, or the reasons university students not eligible for scholarships would nevertheless favor them for others. Moreover, studying the effect of income on congestion is useful even if congestion tools are feasible. For any tax policy that returns revenue to potential users of the congested facility involves an income effect. As we show, this effect also can control congestion, with no need for additional price effects.

• Record URL:
  • http://www.uctc.net/papers/192.pdf
• Record URL:
  • http://www.uctc.net/papers/452.pdf
• 
• Corporate Authors:

  University of California Transportation Center (UCTC)

  University of California, Berkeley
  2614 Dwight Way, 2nd Floor
  Berkeley, CA  United States  94720-1782
• Authors:
  • Glazer, A
  • Konrad, K A
• Publication Date: 1993

Language

• English

Media Info

• Features: References;
• Pagination: 7 p.

Subject/Index Terms

• TRT Terms: City planning; Congestion pricing; Economics; Low income groups; Taxation; Traffic congestion
• Uncontrolled Terms: Congestion; Disadvantaged persons
• Old TRIS Terms: Income redistribution
• Subject Areas: Economics; Highways; Operations and Traffic Management; Planning and Forecasting; Public Transportation; Society;

Filing Info

• Accession Number: 00745245
• Record Type: Publication
• Report/Paper Numbers: Working Paper, UCTC No. 192
• Files: TRIS
• Created Date: Jan 22 1998 12:00AM