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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. Arnott, Richard J., 1979. "Unpriced transport congestion," Journal of Economic Theory, Elsevier, vol. 21(2), pages 294-316, October.
  2. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
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  6. 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.
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  13. 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.
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  18. Mayeres, Inge & Proost, Stef, 1997. " Optimal Tax and Public Investment Rules for Congestion Type of Externalities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 261-79, June.
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  22. Boadway, Robin & Harris, Richard, 1977. "A characterization of piecemeal second best policy," Journal of Public Economics, Elsevier, vol. 8(2), pages 169-190, October.
  23. 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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  25. 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.
  26. Shihe Fu & Stephen L. Ross, 2007. "Wage Premia in Employment Clusters: Does Worker Sorting Bias Estimates?," Working papers 2007-26, University of Connecticut, Department of Economics, revised Dec 2009.
  27. Henderson, J. Vernon, 1981. "The economics of staggered work hours," Journal of Urban Economics, Elsevier, vol. 9(3), pages 349-364, May.
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Citations

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Cited by:
  1. 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.
  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. Peer, Stefanie & Verhoef, Erik T., 2013. "Equilibrium at a bottleneck when long-run and short-run scheduling preferences diverge," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 12-27.
  4. 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.
  5. Tsekeris, Theodore & Geroliminis, Nikolas, 2013. "City size, network structure and traffic congestion," Journal of Urban Economics, Elsevier, vol. 76(C), pages 1-14.
  6. Mogens Fosgerau & Kenneth Small, 2013. "Endogenous Scheduling Preferences and Congestion," Working Papers 131403, University of California-Irvine, Department of Economics.
  7. Yoshitsugu Kanemoto, 2012. "Second-Best Cost-Benefit Analysis in Monopolistic Competition Models of Urban Agglomeration," GRIPS Discussion Papers 11-21, 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. Yoshitsugu Kanemoto, 2013. "Pitfalls in estimating “wider economic benefits” of transportation projects," GRIPS Discussion Papers 13-20, National Graduate Institute for Policy Studies.
  10. repec:dgr:uvatin:2010073 is not listed on IDEAS
  11. 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.
  12. Jeffrey C. Brinkman, 2013. "Congestion, agglomeration, and the structure of cities," Working Papers 13-25, Federal Reserve Bank of Philadelphia.
  13. 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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