Second-best urban tolling with distributive concerns

This paper analyzes the optimal urban congestion toll in a second-best setting where only one road in a network can be tolled. Both heterogeneity in labor productivity and income distribution concerns are considered. The optimal toll balances two types of considerations. The first consideration is the correction of the congestion externality on the tolled road given the distortion on the non-tolled roads, while the second is the equity consideration that takes into account which income group uses the tolled road and how toll revenues are spent. Both separating and pooling equilibria are analyzed for two alternative uses of toll revenues: poll transfers and labor-tax cuts. Using numerical simulations, the authors show that equity concerns can lead a government to prefer inefficient toll levels and recycling via poll transfers rather than via labor tax reductions.

• Record URL:
  https://doi.org/10.1016/j.ecotra.2015.02.003
• Record URL:
  http://www.sciencedirect.com/science/article/pii/S2212012215000064
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/22120122
• Supplemental Notes:
  • Abstract reprinted with permission from Elsevier.
• Authors:
  • Diaz, A
  • Proost, S
• Publication Date: 2014-12

Language

• English

Media Info

• Media Type: Web
• Pagination: pp 257-269
• Serial:
  • Economics of Transportation
  • Volume: 3
  • Issue Number: 4
  • Publisher: Elsevier Science Publishers BV
  • ISSN: 2212-0122
  • Serial URL: http://www.sciencedirect.com/science/journal/22120122

Subject/Index Terms

• TRT Terms: Congestion pricing; Equity; Income; Labor productivity; Revenues; Simulation; Taxes; Tolls; Traffic congestion; Urban areas
• Subject Areas: Finance; Highways; Operations and Traffic Management; I10: Economics and Administration; I73: Traffic Control;

Filing Info

• Accession Number: 01570315
• Record Type: Publication
• Files: TRIS
• Created Date: Jul 21 2015 9:37AM