Second-best urban tolling with distributive concerns
2014 (English)In: Economics of Transportation, ISSN 2212-0122, Vol. 3, no 4, 257-269 p.Article in journal (Refereed) Published
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, we show that equity concerns can lead a government to prefer inefficient toll levels and recycling via poll transfers rather than via labor tax reductions.
Place, publisher, year, edition, pages
2014. Vol. 3, no 4, 257-269 p.
Congestion pricing, Tax reform, Urban tolls
Transport Systems and Logistics
IdentifiersURN: urn:nbn:se:kth:diva-166964DOI: 10.1016/j.ecotra.2015.02.003ScopusID: 2-s2.0-84928092210OAI: oai:DiVA.org:kth-166964DiVA: diva2:814834
QC 201505282015-05-282015-05-212015-05-28Bibliographically approved