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On subsidising auto-commuting

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  • Edward Calthrop

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    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

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    Abstract

    Evidence suggests that a considerable proportion of peak-period trips are made for purposes other than for commuting to or from work. Given the different degrees of Hicksian complementarity with the labour market, optimal tax theory suggests that, in a second-best world, different trip purposes should be taxed at different rates. This paper explores this issue and argues for a uniform congestion toll (independent of trip purpose) combined with a subsidy to auto-commuters. A numerical model suggests that while, in the absence of congestion tolls, commuting subsidies are welfare decreasing, an optimal pricing scheme entails auto-commuters receiving a subsidy of nearly 50 per cent of the uniform road toll.

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    File URL: http://www.econ.kuleuven.ac.be/ew/academic/energmil/downloads/ete-wp01-13.pdf
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    Bibliographic Info

    Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiƫn, Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0113.

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    Length: 34 pages
    Date of creation: Jul 2001
    Date of revision:
    Handle: RePEc:ete:etewps:ete0113

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