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Efficiency of Decentralized Road Investment and Pricing in a Multi-Jurisdictional City with Spillovers

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  • Jan K. Brueckner

Abstract

This paper shows that the inefficiency of fiscal decentralization in the presence of spillovers, a main tenet of the decentralization literature, is overturned in a particular transportation context. In a monocentric city where road (bridge) capacity is financed by budget-balancing user fees, decentralized capacity choices (made by individual zones within the city) generate the social optimum despite the presence of spillovers. This conclusion is closely tied to the famous self-financing theorem of transporation economics.

Suggested Citation

  • Jan K. Brueckner, 2013. "Efficiency of Decentralized Road Investment and Pricing in a Multi-Jurisdictional City with Spillovers," CESifo Working Paper Series 4384, CESifo.
    • Handle: RePEc:ces:ceswps:_4384
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp4384.pdf
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    References listed on IDEAS

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    1. Brueckner, Jan K. & Helsley, Robert W., 2011. "Sprawl and blight," Journal of Urban Economics, Elsevier, vol. 69(2), pages 205-213, March.
    2. Jonas Westin & Joel P. Franklin & Sofia Grahn-Voorneveld & Stef Proost, 2012. "How to decide on regional infrastructure to achieve intra-regional acceptability and inter-regional consensus?," Papers in Regional Science, Wiley Blackwell, vol. 91(3), pages 617-643, August.
    3. Hikaru Ogawa & David E. Wildasin, 2009. "Think Locally, Act Locally: Spillovers, Spillbacks, and Efficient Decentralized Policymaking," American Economic Review, American Economic Association, vol. 99(4), pages 1206-1217, September.
    4. Anas, Alex & Pines, David, 2008. "Anti-sprawl policies in a system of congested cities," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 408-423, September.
    5. Wheaton, William C., 1998. "Land Use and Density in Cities with Congestion," Journal of Urban Economics, Elsevier, vol. 43(2), pages 258-272, March.
    6. 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. Bruno Borger & Stef Proost, 2016. "The political economy of pricing and capacity decisions for congestible local public goods in a federal state," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(5), pages 934-959, October.

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    More about this item

    Keywords

    decentralization; road pricing; congestion; spillovers;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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