Second-best congestion pricing schemes in the monocentric city
AbstractThis paper considers second-best congestion pricing in the monocentric city, with endogenous residential density and endogenous labour supply. A spatial general equilibrium model is developed that allows consideration of the three-way interactions between urban density, traffic congestion and labour supply. Congestion pricing schemes are analyzed that are second best â€˜by designâ€™ (and not because distortions exist elsewhere in the spatial economy), like cordon charging and flat kilometre charges. Both for Cobb-Douglas utility and for CES utility, the analyses suggest that the relative welfare losses from second-best pricing, compared to first-best pricing, are surprisingly small. *Affiliated to the Tinbergen Institute, Roetersstraat 31, 1018 WB Amsterdam. Key words: Traffic congestion, second-best pricing, urban structure, spatial general equilibrium JEL codes: R41, R48, D62
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Urban Economics.
Volume (Year): 58 (2005)
Issue (Month): 3 (November)
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Web page: http://www.elsevier.com/locate/inca/622905
Other versions of this item:
- Erik Verhoef, 2004. "Second-best Congestion Pricing Schemes in the Monocentric City," ERSA conference papers ersa04p408, European Regional Science Association.
- Erik T. Verhoef, 2004. "Second-best Congestion Pricing Schemes in the Monocentric City," Tinbergen Institute Discussion Papers 04-110/3, Tinbergen Institute.
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
- D62 - Microeconomics - - Welfare Economics - - - Externalities
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