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Second-best congestion pricing schemes in the monocentric city

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  • Verhoef, Erik T.

Abstract

This 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 ‘by design’ (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 Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 58 (2005)
Issue (Month): 3 (November)
Pages: 367-388

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Handle: RePEc:eee:juecon:v:58:y:2005:i:3:p:367-388

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Web page: http://www.elsevier.com/locate/inca/622905

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  1. Anas, Alex & Xu, Rong, 1999. "Congestion, Land Use, and Job Dispersion: A General Equilibrium Model," Journal of Urban Economics, Elsevier, vol. 45(3), pages 451-473, May.
  2. Solow, Robert M. & Vickrey, William S., 1971. "Land use in a long narrow city," Journal of Economic Theory, Elsevier, vol. 3(4), pages 430-447, December.
  3. Mun, Se-il & Konishi, Ko-ji & Yoshikawa, Kazuhiro, 2003. "Optimal cordon pricing," Journal of Urban Economics, Elsevier, vol. 54(1), pages 21-38, July.
  4. Parry, Ian W.H. & Bento, Antonio Miguel R., 1999. "Revenue recycling and the welfare effects of road pricing," Policy Research Working Paper Series 2253, The World Bank.
  5. Verhoef, Erik T. & Nijkamp, Peter, 2002. "Externalities in urban sustainability: Environmental versus localization-type agglomeration externalities in a general spatial equilibrium model of a single-sector monocentric industrial city," Ecological Economics, Elsevier, vol. 40(2), pages 157-179, February.
  6. Mayeres, Inge & Proost, Stef, 2001. "Marginal tax reform, externalities and income distribution," Journal of Public Economics, Elsevier, Elsevier, vol. 79(2), pages 343-363, February.
  7. Anas, Alex & Kim, Ikki, 1996. "General Equilibrium Models of Polycentric Urban Land Use with Endogenous Congestion and Job Agglomeration," Journal of Urban Economics, Elsevier, vol. 40(2), pages 232-256, September.
  8. Kanemoto, Yoshitsugu, 1977. "Cost-benefit analysis and the second best land use for transportation," Journal of Urban Economics, Elsevier, vol. 4(4), pages 483-503, October.
  9. Arnott, Richard J., 1979. "Unpriced transport congestion," Journal of Economic Theory, Elsevier, vol. 21(2), pages 294-316, October.
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Cited by:
  1. Michel De Lara & André De Palma & Moez Kilani & Serge Piperno, 2008. "Congestion pricing and long term urban form: Application to Ile-de-France," Working Papers hal-00348439, HAL.
  2. Ian W. H. Parry & Margaret Walls & Winston Harrington, 2007. "Automobile Externalities and Policies," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 373-399, June.
  3. De Lara, Michel & de Palma, André & Kilani, Moez & Piperno, Serge, 2013. "Congestion pricing and long term urban form: Application to Paris region," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(2), pages 282-295.
  4. repec:dgr:uvatin:2013031 is not listed on IDEAS
  5. Zhi-Chun Li & Ya-Dong Wang & William Lam & Agachai Sumalee & Keechoo Choi, 2014. "Design of Sustainable Cordon Toll Pricing Schemes in a Monocentric City," Networks and Spatial Economics, Springer, Springer, vol. 14(2), pages 133-158, June.
  6. Chu, Chih-Peng & Tsai, Jyh-Fa, 2008. "The optimal location and road pricing for an elevated road in a corridor," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 42(5), pages 842-856, June.
  7. De Borger, Bruno, 2009. "Commuting, congestion tolls and the structure of the labour market: Optimal congestion pricing in a wage bargaining model," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 39(4), pages 434-448, July.
  8. Anas, Alex & Hiramatsu, Tomoru, 2013. "The economics of cordon tolling: General equilibrium and welfare analysis," Economics of Transportation, Elsevier, vol. 2(1), pages 18-37.
  9. André De Palma & Moez Kilani & Michel De Lara & Serge Piperno, 2011. "Cordon pricing in the monocentric city: theory and application to Paris region," Recherches économiques de Louvain, De Boeck Université, De Boeck Université, vol. 77(2), pages 105-124.
  10. André De Palma & Moez Kilani & Michel De Lara & Serge Piperno, 2011. "Cordon pricing in the Monocentric city model: Theory and application to Ile-de- France," Post-Print hal-00348437, HAL.
  11. Li, Zhi-Chun & Chen, Ya-Juan & Wang, Ya-Dong & Lam, William H.K. & Wong, S.C., 2013. "Optimal density of radial major roads in a two-dimensional monocentric city with endogenous residential distribution and housing prices," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(6), pages 927-937.
  12. Hyman, G. & Mayhew, L., 2008. "Toll optimisation on river crossings serving large cities," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 42(1), pages 28-47, January.
  13. Safirova, Elena A. & Houde, Sébastien & Lipman, D. Abram & Harrington, Winston & Bagliano, Andrew D., 2006. "Congestion Pricing: Long-Term Economic and Land-Use Effects," Discussion Papers, Resources For the Future dp-06-37, Resources For the Future.
  14. Jan K. Brueckner, 2014. "Cordon Tolling in a City with Congested Bridges," CESifo Working Paper Series 4898, CESifo Group Munich.

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