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The European road pricing game: how to enforce optimal pricing in high-transit countries under asymmetric information

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  • Saskia VAN DER LOO
  • Stef PROOST

Abstract

A federal government tries to force local governments to implement welfare optimal tolling and investment. Welfare optimal tolling requires charging for marginal external costs. Local governments have an incentive to charge more than the marginal social cost whenever there is transit traffic. We analyse the pricing and investment issue in an asymmetric information setting where the local governments have better information than the federal government. The case of air pollution and of congestion are discussed.

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File URL: http://www.econ.kuleuven.be/eng/ew/discussionpapers/Dps11/Dps1119.pdf
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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces11.19.

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Date of creation: Sep 2011
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Handle: RePEc:ete:ceswps:ces11.19

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Cited by:
  1. De Borger, Bruno & Proost, Stef, 2013. "Traffic externalities in cities: The economics of speed bumps, low emission zones and city bypasses," Journal of Urban Economics, Elsevier, vol. 76(C), pages 53-70.

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