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Congestion Tolling with Agglomeration Externalities

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  • Richard Arnott

    ()
    (Boston College)

Abstract

Consider an urban economy with two types of externalities, negative traffic congestion externalities and positive agglomeration externalities deriving from non-market interaction. Suppose that urban travel can be tolled, that non-market interaction cannot be subsidized, and that non-market interaction is stimulated by a reduction in travel costs. Then the optimal toll is below the congestion externality cost. This paper explores this line of reasoning.

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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 660.

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Length: 34 pages
Date of creation: 26 Mar 2007
Date of revision:
Handle: RePEc:boc:bocoec:660

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References

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  1. Small, K.A. & Gomez-Ibanez, J.A., 1996. "Urban Transportation," Papers 95-96-4, California Irvine - School of Social Sciences.
  2. Enrico Moretti, 2003. "Human Capital Externalities in Cities," NBER Working Papers 9641, National Bureau of Economic Research, Inc.
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  7. Arnott, Richard & Kraus, Marvin, 1998. "When are anonymous congestion charges consistent with marginal cost pricing?," Journal of Public Economics, Elsevier, vol. 67(1), pages 45-64, January.
  8. Richard Arnott & An Yan, 2000. "The Two-Mode Problem: Second-Best Pricing and Capacity," Boston College Working Papers in Economics 474, Boston College Department of Economics.
  9. Small, Kenneth A. & Winston, Clifford & Yan, Jia, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Working paper 179, Regulation2point0.
  10. Wilson, Paul W., 1988. "Wage variation resulting from staggered work hours," Journal of Urban Economics, Elsevier, vol. 24(1), pages 9-26, July.
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  16. Erik T. Verhoef, 2000. "Second-Best Congestion Pricing in General Networks - Algorithms for Finding Second-Best Optimal Toll Levels and Toll Points," Tinbergen Institute Discussion Papers 00-084/3, Tinbergen Institute.
  17. Stuart S. Rosenthal & William C. Strange, 1999. "Geography, Industrial Organization, and Agglomeration," Center for Policy Research Working Papers 14, Center for Policy Research, Maxwell School, Syracuse University.
  18. 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.
  19. Fu, Shihe, 2007. "Smart Cafe Cities: Testing human capital externalities in the Boston metropolitan area," Journal of Urban Economics, Elsevier, vol. 61(1), pages 86-111, January.
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  25. Wilson, John D., 1983. "Optimal road capacity in the presence of unpriced congestion," Journal of Urban Economics, Elsevier, vol. 13(3), pages 337-357, May.
  26. Richard Arnott & Tilmann Rave & Ronnie Schöb, 2005. "Alleviating Urban Traffic Congestion," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012197, December.
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Citations

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Cited by:
  1. Kanemoto, Yoshitsugu, 2013. "Second-best cost–benefit analysis in monopolistic competition models of urban agglomeration," Journal of Urban Economics, Elsevier, vol. 76(C), pages 83-92.
  2. Borck, Rainald & Wrede, Matthias, 2009. "Subsidies for intracity and intercity commuting," Journal of Urban Economics, Elsevier, vol. 66(1), pages 25-32, July.
  3. Yuval Kantor & Piet Rietveld & Jos van Ommeren, 2013. "Towards a General Theory of Mixed Zones: The Role of Congestion," Tinbergen Institute Discussion Papers 13-084/VIII, Tinbergen Institute.
  4. Stefanie Peer & Erik T. Verhoef, 2013. "Equilibrium at a Bottleneck when Long-Run and Short-Run Scheduling Preferences diverge," Tinbergen Institute Discussion Papers 13-028/VIII, Tinbergen Institute.
  5. Jeffrey C. Brinkman, 2013. "Congestion, agglomeration, and the structure of cities," Working Papers 13-25, Federal Reserve Bank of Philadelphia.
  6. Zheng, Nan & Waraich, Rashid A. & Axhausen, Kay W. & Geroliminis, Nikolas, 2012. "A dynamic cordon pricing scheme combining the Macroscopic Fundamental Diagram and an agent-based traffic model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1291-1303.
  7. Yoshitsugu Kanemoto, 2013. "Pitfalls in estimating “wider economic benefits” of transportation projects," GRIPS Discussion Papers 13-20, National Graduate Institute for Policy Studies.
  8. Viard, Brian & Fu, Shihe, 2011. "The effect of Beijing’s driving restrictions on pollution and economic activity," MPRA Paper 33009, University Library of Munich, Germany.
  9. repec:dgr:uvatin:2010073 is not listed on IDEAS
  10. Giovanni Russo & Jos Ommeren & Piet Rietveld, 2012. "The university workers’ willingness to pay for commuting," Transportation, Springer, vol. 39(6), pages 1121-1132, November.
  11. Tsekeris, Theodore & Geroliminis, Nikolas, 2013. "City size, network structure and traffic congestion," Journal of Urban Economics, Elsevier, vol. 76(C), pages 1-14.
  12. Harrington, Winston & Safirova, Elena & Coleman, Conrad & Houde, Sebastien & Finkel, Adam M., 2014. "Distributional Consequences of Public Policies: An Example from the Management of Urban Vehicular Travel Abstract: This paper uses a spatially disaggregated computable general equilibrium model of a l," Discussion Papers dp-14-04, Resources For the Future.
  13. Rhee, Hyok-Joo & Yu, Sanggyun & Hirte, Georg, 2014. "Zoning in cities with traffic congestion and agglomeration economies," Regional Science and Urban Economics, Elsevier, vol. 44(C), pages 82-93.
  14. repec:wyi:wpaper:002039 is not listed on IDEAS
  15. Mogens Fosgerau & Kenneth Small, 2013. "Endogenous Scheduling Preferences and Congestion," Working Papers 131403, University of California-Irvine, Department of Economics.
  16. Mogens Fosgerau & André De Palma & Anders Karlstrom & Kenneth A. Small, 2012. "Trip timing and scheduling preferences," Working Papers hal-00742267, HAL.

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