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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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  1. Small, Kenneth A. & Winston, Clifford & Yan, Jia, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Working paper 179, Regulation2point0.
  2. Shihe Fu, 2005. "Smart Cafe Cities: Testing Human Capital Externalities in the Boston Metropolitan Area," Working Papers 05-24, Center for Economic Studies, U.S. Census Bureau.
  3. 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.
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  16. William C. Wheaton, 1978. "Price-Induced Distortions in Urban Highway Investment," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 622-632, Autumn.
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  25. Kanemoto, Yoshitsugu, 1977. "Cost-benefit analysis and the second best land use for transportation," Journal of Urban Economics, Elsevier, vol. 4(4), pages 483-503, October.
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Cited by:
  1. Rainald Borck & Matthias Wrede, 2008. "Subsidies for Intracity and Intercity Commuting," CESifo Working Paper Series 2321, CESifo Group Munich.
  2. 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.
  3. 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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