The European road pricing game: how to enforce optimal pricing in high-transit countries under asymmetric information
AbstractA 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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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces11.19.
Date of creation: Sep 2011
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-03 (All new papers)
- NEP-CTA-2012-04-03 (Contract Theory & Applications)
- NEP-TRE-2012-04-03 (Transport Economics)
- NEP-URE-2012-04-03 (Urban & Real Estate Economics)
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