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Credible commitment and congestion pricing

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  • Michael Manville
  • David King

Abstract

Transportation analysts frequently assert that congestion pricing’s political obstacles can be overcome through astute use of the toll revenue pricing generates. Such “revenue recycling,” however, implies that the collectors of the toll revenue will not be its final recipients, meaning that any revenue recipient must believe that the revenue collector will honor promises to deliver the money. This raises the potential for credible commitment problems. Promises to spend revenue can solve one political problem, because revenue is an easy benefit to understand, but create another one, because revenue is easy to divert. Revenue recycling may therefore not be a promising way to build political support for congestion pricing. We highlight the role commitment problems have played efforts to implement congestion pricing, using examples from around the world and then focusing on California. Because congestion reduction is a more certain benefit than any particular use of the toll revenue, demonstration projects, rather than revenue promises, will be key to pricing’s political success. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Michael Manville & David King, 2013. "Credible commitment and congestion pricing," Transportation, Springer, vol. 40(2), pages 229-249, February.
    • Handle: RePEc:kap:transp:v:40:y:2013:i:2:p:229-249
    DOI: 10.1007/s11116-012-9430-9
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    2. Hansla, André & Hysing, Erik & Nilsson, Andreas & Martinsson, Johan, 2017. "Explaining voting behavior in the Gothenburg congestion tax referendum," Transport Policy, Elsevier, vol. 53(C), pages 98-106.
    3. Hysing, Erik & Isaksson, Karolina, 2015. "Building acceptance for congestion charges – the Swedish experiences compared," Journal of Transport Geography, Elsevier, vol. 49(C), pages 52-60.
    4. Sugiarto, Sugiarto & Miwa, Tomio & Morikawa, Takayuki, 2017. "Inclusion of latent constructs in utilitarian resource allocation model for analyzing revenue spending options in congestion charging policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 103(C), pages 36-53.
    5. Hysing, Erik, 2015. "Citizen participation or representative government – Building legitimacy for the Gothenburg congestion tax," Transport Policy, Elsevier, vol. 39(C), pages 1-8.
    6. Chandra Balijepalli & Simon Shepherd, 2016. "Cordon tolls and competition between cities with symmetric and asymmetric interactions," Transportation, Springer, vol. 43(5), pages 797-821, September.
    7. Börjesson , Maria & Kristoffersson , Ida, 2014. "The Gothenburg congestion charge: effects, design and politics," Working papers in Transport Economics 2014:25, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    8. Börjesson, Maria & Kristoffersson, Ida, 2015. "The Gothenburg congestion charge. Effects, design and politics," Transportation Research Part A: Policy and Practice, Elsevier, vol. 75(C), pages 134-146.

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