Evaluating road tolls in the presence of tax distortions: Revenue recycling revisited
(English)Manuscript (preprint) (Other academic)
A well-known result in the road pricing literature is that the welfare potential of a road toll critically depends on revenue use. Using a simple general equilibrium model we show that the relative efficiency of different revenue recycling policies depends more on assumptions regarding inefficiencies in the initial tax system than on the road toll per se. Without a thorough analysis of the initial tax systemand the political situation surrounding the decision, it might make more sense to analyze the effect of road pricing “as if” the policy instruments in the no-toll situation are chosen on welfare maximizing principles.
Economics Transport Systems and Logistics
Research subject SRA - Transport
IdentifiersURN: urn:nbn:se:kth:diva-103233OAI: oai:DiVA.org:kth-103233DiVA: diva2:559104
FunderVinnovaTrenOp, Transport Research Environment with Novel Perspectives
QS 20122012-10-072012-10-072012-10-10Bibliographically approved