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Do Commuters Free-ride? Estimating the Impacts of Interjurisdictional Commuting on Local Public Goods Expenditures

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  • Shields, Martin
  • Shideler, David W.

Abstract

In an era of political pressure to reduce taxes while increasing government services, local officials face difficult choices regarding what services to provide and how to finance them. One outcropping of this dilemma is that local citizens are expressing concerns that commuters use local government services but without paying for them. In response, some communities are considering taxing commuters. In this study we develop a basic model of congestion in a two-city model to examine commuters’ effects on the optimal provision of public goods. The theoretical result suggests that taxing commuters at the difference in marginal congestion costs between the two cities can attain market equilibrium. We then specify an empirical model to determine this tax’s size for Pennsylvania municipalities. The econometric results show differences in marginal congestion costs between workplace and resident communities, providing evidence that commuters may free-ride. The difference in marginal congestion costs, however, tends to be small, so we advise policymakers to be hesitant in adopting such a tax.

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Bibliographic Info

Article provided by Mid-Continent Regional Science Association in its journal Journal of Regional Analysis and Policy.

Volume (Year): 33 (2003)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:ags:jrapmc:132244

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Keywords: Public Economics;

References

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  1. Wildasin, David E., 1987. "Theoretical analysis of local public economics," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 29, pages 1131-1178 Elsevier.
  2. Edwards, John H. Y., 1990. "Congestion function specification and the "publicness" of local public goods," Journal of Urban Economics, Elsevier, vol. 27(1), pages 80-96, January.
  3. Craig, Steven G., 1987. "The impact of congestion on local public good production," Journal of Public Economics, Elsevier, vol. 32(3), pages 331-353, April.
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Cited by:
  1. Giovanni Russo & Federico Tedeschi & Aura Reggiani & Peter Nijkamp, 2014. "Commuter Effects on Local Labour Markets: A German Modelling Study," Urban Studies, Urban Studies Journal Limited, vol. 51(3), pages 493-508, February.
  2. Giovanni Russo & Federico Tedeschi & Aura Reggiani & Peter Nijkamp, 2011. "Commuter Effects on Local Labour Markets: A German Modelling Study," Tinbergen Institute Discussion Papers 11-114/3, Tinbergen Institute.
  3. Giovanni Russo & Peter Nijkamp & Aura Reggiani & Federico Tedeschi, 2011. "Commuters' effect on local labour markets: A german case study," ERSA conference papers ersa10p1376, European Regional Science Association.

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