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Credible commitment and congestion pricing

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  • Michael Manville

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  • David King
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    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

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    Bibliographic Info

    Article provided by Springer in its journal Transportation.

    Volume (Year): 40 (2013)
    Issue (Month): 2 (February)
    Pages: 229-249

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    Handle: RePEc:kap:transp:v:40:y:2013:i:2:p:229-249

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    Web page: http://www.springerlink.com/link.asp?id=103007

    Related research

    Keywords: Congestion pricing; Revenue recycling; Credible commitment; Stockholm; Political acceptability;

    References

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    1. Winslott-Hiselius, Lena & Brundell-Freij, Karin & Vagland, Asa & Byström, Camilla, 2009. "The development of public attitudes towards the Stockholm congestion trial," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(3), pages 269-282, March.
    2. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-86, April.
    3. Björn Hårsman & John M. Quigley, 2010. "Political and public acceptability of congestion pricing: Ideology and self-interest," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(4), pages 854-874.
    4. Weingast, Barry R, 1995. "The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 1-31, April.
    5. McQuaid, Ronald & Grieco, Margaret, 2005. "Edinburgh and the politics of congestion charging: Negotiating road user charging with affected publics," Transport Policy, Elsevier, vol. 12(5), pages 475-476, September.
    6. Schaller, Bruce, 2010. "New York City's congestion pricing experience and implications for road pricing acceptance in the United States," Transport Policy, Elsevier, vol. 17(4), pages 266-273, August.
    7. Eliasson, Jonas & Jonsson, Lina, 2011. "The unexpected "yes": Explanatory factors behind the positive attitudes to congestion charges in Stockholm," Transport Policy, Elsevier, vol. 18(4), pages 636-647, August.
    8. King, David & Manville, Michael & Shoup, Donald, 2007. "The political calculus of congestion pricing," Transport Policy, Elsevier, vol. 14(2), pages 111-123, March.
    9. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September.
    10. King, David & Manville, Michael & Shoup, Donald, 2007. "The political calculus of congestion pricing," University of California Transportation Center, Working Papers qt9js9z8gz, University of California Transportation Center.
    11. Cowen, T. & Glazer, A. & Zajc, K., 1995. "Credibility May Require Discretion, not Rules," Papers 94-95-27, California Irvine - School of Social Sciences.
    12. Small, Kenneth A., 1992. "Using the Revenues from Congestion Pricing," University of California Transportation Center, Working Papers qt32p9m3mm, University of California Transportation Center.
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    Cited by:
    1. Hensher, David A. & Bliemer, Michiel C.J., 2014. "What type of road pricing scheme might appeal to politicians? Viewpoints on the challenge in gaining the citizen and public servant vote by staging reform," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 227-237.

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