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Discrete choice models and optimal two-part tariffs in the presence of externalities: optimal taxation of cars

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  • De Borger B.

Abstract

The purpose of this paper is to analyse optimal two-part tariffs in the presence of externalities within the framework of a model of discrete choice. The prototype application of the model is optimal taxation of car ownership and car use to correct for external costs. The externality we consider is allowed to cause feedback effects on demand and ownership shares and, therefore, on tax revenues. It is found that only the feedback effect of the externality on ownership shares is important in determining the optimal tax structure. When external costs differ between car types, it is shown that the role of fixed taxes crucially depends on the available variable tax instruments; various restrictions on variable tax instruments are analysed. We also study the implications of heterogeneity and distributive concerns for the optimal taxation of externalities via user and ownership taxes. We identify the specific role of the distribution of ownership and of conditional demands as well as the distributive impact of the externality itself.

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Bibliographic Info

Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2000021.

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Length: 50 pages
Date of creation: Sep 2000
Date of revision:
Handle: RePEc:ant:wpaper:2000021

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Postal: Prinsstraat 13, B-2000 Antwerpen
Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/
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  1. Glazer, Amihai & Niskanen, Esko, 1992. "Parking fees and congestion," Regional Science and Urban Economics, Elsevier, vol. 22(1), pages 123-132, March.
  2. Lave, Charles, 1994. "The demand curve under road pricing and the problem of political feasibility," Transportation Research Part A: Policy and Practice, Elsevier, vol. 28(2), pages 83-91, March.
  3. Lave, Charles, 1994. "The Demand Curve Under Road Pricing and the Problem of Political Feasibility," University of California Transportation Center, Working Papers qt5165m7jr, University of California Transportation Center.
  4. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January.
  5. Bovenberg, A.L. & Ploeg, F. van der, 1992. "Environmental policy, public finance and the labour market in a second-best world," Discussion Paper 1992-43, Tilburg University, Center for Economic Research.
  6. Parry, Ian W H & Bento, Antonio, 2001. " Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 645-71, December.
  7. Kraus, Marvin, 1989. "The welfare gains from pricing road congestion using automatic vehicle identification and on-vehicle meters," Journal of Urban Economics, Elsevier, vol. 25(3), pages 261-281, May.
  8. Harvey S. Rosen & Kenneth A. Small, 1981. "Applied Welfare Economics with Discrete Choice Models," NBER Working Papers 0319, National Bureau of Economic Research, Inc.
  9. Ng, Yew-Kwang & Weisser, Mendel, 1974. "Optimal Pricing with a Budget Constraint-The Case of the Two-part Tariff," Review of Economic Studies, Wiley Blackwell, vol. 41(3), pages 337-45, July.
  10. S. Proost & D. Regemorter, 1995. "The double dividend and the role of inequality aversion and macroeconomic regimes," International Tax and Public Finance, Springer, vol. 2(2), pages 207-219, August.
  11. P. A. Diamond, 1975. "A Many-Person Ramsey Tax Rule," Working papers 146, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. Glaister, Stephen & Lewis, Davis, 1978. "An integrated fares policy for transport in London," Journal of Public Economics, Elsevier, vol. 9(3), pages 341-355, June.
  13. De Borger B., 1999. "Optimal two-part tariffs in a model of discrete choice," Working Papers 1999005, University of Antwerp, Faculty of Applied Economics.
  14. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-79, March.
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Citations

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Cited by:
  1. Stef Proost & Inge Mayeres, 2005. "Towards better transport pricing and taxation in Belgium," Energy, Transport and Environment Working Papers Series ete0504, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  2. Stef Proost & Kurt Van Dender, 2003. "Marginal Social Cost Pricing for all Transport modes and the effects of modal budget constraints," Energy, Transport and Environment Working Papers Series ete0311, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  3. Batarce, Marco & Ivaldi, Marc, 2011. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," CEPR Discussion Papers 8416, C.E.P.R. Discussion Papers.
  4. María Angeles García Valiñas, 2004. "Eficiencia y equidad en el diseño de precios óptimos para bienes y servicios públicos," Hacienda Pública Española, IEF, vol. 168(1), pages 95-119, march.
  5. Inge Mayeres & Stef Proost, 2000. "Should Diesel Cars in Europe be discouraged ?," Center for Economic Studies - Discussion papers ces0018, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  6. Barter, Paul A., 2005. "A vehicle quota integrated with road usage pricing: A mechanism to complete the phase-out of high fixed vehicle taxes in Singapore," Transport Policy, Elsevier, vol. 12(6), pages 525-536, November.
  7. Ian W. H. Parry & Kenneth A. Small, 2005. "Does Britain or the United States Have the Right Gasoline Tax?," American Economic Review, American Economic Association, vol. 95(4), pages 1276-1289, September.
  8. Batarce, Marco & Ivaldi, Marc, 2010. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," TSE Working Papers 10-226, Toulouse School of Economics (TSE), revised Apr 2011.
  9. Carmona, Miguel, 2010. "The regulatory function in public-private partnerships for the provision of transport infrastructure," Research in Transportation Economics, Elsevier, vol. 30(1), pages 110-125.
  10. Lindsey, Robin & Wang, Judith & Yang, Hai, 2010. "Nonlinear Pricing on Private Roads with Congestion and Toll Collection Costs," Working Papers 2010-3, University of Alberta, Department of Economics.
  11. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
  12. Batarce, Marco & Ivaldi, Marc, 2010. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," IDEI Working Papers 659, Institut d'Économie Industrielle (IDEI), Toulouse, revised Apr 2011.
  13. Laurence Turcksin & Olivier Mairesse & Cathy Macharis & Joeri Van Mierlo, 2013. "Encouraging Environmentally Friendlier Cars via Fiscal Measures: General Methodology and Application to Belgium," Energies, MDPI, Open Access Journal, vol. 6(1), pages 471-491, January.
  14. Batarce, Marco & Ivaldi, Marc, 2014. "Urban travel demand model with endogenous congestion," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 331-345.

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