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Basic economic principles of road pricing: From theory to applications

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  • Rouwendal, Jan
  • Verhoef, Erik T.

Abstract

This paper presents, a non-technical introduction to the economic principles relevant for transport pricing design and analysis. We provide the basic rationale behind pricing of externalities, discuss why simple Pigouvian tax rules that equate charges to marginal external costs are not optimal in 'second-best' settings, and discuss the conceptual link between congestion pricing and road capacity. The final part of the paper is devoted to implementation paths for transport pricing policies. A simple numerical model demonstrates how different time patterns of constraints on pricing and capacity policy instruments may lead to different time patterns of efficiency along those implementation paths.

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Bibliographic Info

Article provided by Elsevier in its journal Transport Policy.

Volume (Year): 13 (2006)
Issue (Month): 2 (March)
Pages: 106-114

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Handle: RePEc:eee:trapol:v:13:y:2006:i:2:p:106-114

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References

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Cited by:
  1. Choo, Sangho & Mokhtarian, Patricia L, 2008. "How do people respond to congestion mitigation policies? A multivariate probit model of the individual consideration of three travel-related strategy bundles," University of California Transportation Center, Working Papers qt53s553tn, University of California Transportation Center.
  2. Andre de Palma & Lindsey Robin & Proost Stef, 2005. "Research challenges in modelling urban road pricing: an overview," Energy, Transport and Environment Working Papers Series, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment ete0506, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  3. Marco Percoco, 2007. "Urban Transport Policies and the Environment: Evidence from Italy," Working Papers, Fondazione Eni Enrico Mattei 2007.59, Fondazione Eni Enrico Mattei.
  4. Xie, Litian & Olszewski, Piotr, 2011. "Modelling the effects of road pricing on traffic using ERP traffic data," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 45(6), pages 512-522, July.
  5. de Palma, André & Lindsey, Robin & Niskanen, Esko, 2006. "Policy insights from the urban road pricing case studies," Transport Policy, Elsevier, Elsevier, vol. 13(2), pages 149-161, March.
  6. 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.
  7. de Grange, Louis & Troncoso, Rodrigo, 2011. "Impacts of vehicle restrictions on urban transport flows: The case of Santiago, Chile," Transport Policy, Elsevier, Elsevier, vol. 18(6), pages 862-869, November.
  8. Kono, Tatsuhito & Joshi, Kirti Kusum & Kato, Takeaki & Yokoi, Takahisa, 2012. "Optimal regulation on building size and city boundary: An effective second-best remedy for traffic congestion externality," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 42(4), pages 619-630.
  9. Gühnemann, Astrid & Koh, Andrew & Shepherd, Simon & Lawler, Mary, 2011. "Implications of interdependencies between charging strategies of local authorities for the protection of sensitive areas in the Trans-Pennine Corridor," Utilities Policy, Elsevier, Elsevier, vol. 19(1), pages 42-52, January.
  10. Rodrigo Garrido, 2008. "Road Pricing for Hazardous Materials Transportation in Urban Networks," Networks and Spatial Economics, Springer, Springer, vol. 8(2), pages 273-285, September.
  11. McArthur, D.P. & Thorsen, I. & Ubøe, J., 2012. "Labour market effects in assessing the costs and benefits of road pricing," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 46(2), pages 310-321.
  12. 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.
  13. Inturri, Giuseppe & Ignaccolo, Matteo, 2011. "Modelling the impact of alternative pricing policies on an urban multimodal traffic corridor," Transport Policy, Elsevier, Elsevier, vol. 18(6), pages 777-785, November.
  14. Chorus, Caspar G. & Annema, Jan Anne & Mouter, Niek & van Wee, Bert, 2011. "Modeling politicians' preferences for road pricing policies: A regret-based and utilitarian perspective," Transport Policy, Elsevier, Elsevier, vol. 18(6), pages 856-861, November.
  15. 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.
  16. Tillema, Taede & Ben-Elia, Eran & Ettema, Dick & van Delden, Janet, 2013. "Charging versus rewarding: A comparison of road-pricing and rewarding peak avoidance in the Netherlands," Transport Policy, Elsevier, Elsevier, vol. 26(C), pages 4-14.
  17. Jonas Westin, 2011. "Labor Market Effects of Road Pricing in a Population with Continuously Distributed Value of Time," ERSA conference papers, European Regional Science Association ersa10p1458, European Regional Science Association.
  18. Ben-Elia, Eran & Ettema, Dick, 2011. "Rewarding rush-hour avoidance: A study of commuters' travel behavior," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 45(7), pages 567-582, August.
  19. Vold, Arild, 2006. "Phased implementation of transport pricing for Greater Oslo," Transport Policy, Elsevier, Elsevier, vol. 13(2), pages 140-148, March.
  20. Pahaut, Serge & Sikow, Catharina, 2006. "History of thought and prospects for road pricing," Transport Policy, Elsevier, Elsevier, vol. 13(2), pages 173-176, March.
  21. Kono, Tatsuhito & Joshi, Kirti Kusum, 2012. "A new interpretation on the optimal density regulations: Closed and open city," Journal of Housing Economics, Elsevier, Elsevier, vol. 21(3), pages 223-234.

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