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Modal choice and optimal congestion

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  • Quentin David

    ()
    (CREA, University of Luxembourg)

  • Renaud Foucart

    ()
    (ECARES, Université libre de Bruxelles)

Abstract

We study the choice of transportation modes within a city where commuters have het- erogeneous preferences for a car. As in standard models of externalities, the market outcome never maximizes aggregate welfare. We show that in the presence of multiple equilibria prob- lems of coordination can worsen this result. Hence, a social planner focusing on the marginal impact of policies may miss the largest source of inefficiency. We discuss two policy tools: taxation and traffic separation (e.g. exclusive lanes for public transportation). Setting the optimal levels of taxation and of traffic separation constitutes a necessary but not a sufficient condition to reach the first best equilibrium. Comparing the relative efficiency of both poli- cies, we show that traffic separation should be preferred for large-scale policies while taxation better applies to marginal modifications of commuting patterns.

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Bibliographic Info

Paper provided by Center for Research in Economic Analysis, University of Luxembourg in its series CREA Discussion Paper Series with number 12-03.

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Date of creation: 2012
Date of revision:
Handle: RePEc:luc:wpaper:12-03

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Keywords: Modal choice; Coordination; Network effect; Cross-modal congestion;

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References

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  1. Duranton, Gilles & Turner, Matthew A, 2009. "The Fundamental Law of Road Congestion: Evidence from US cities," CEPR Discussion Papers 7462, C.E.P.R. Discussion Papers.
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  9. Juan Carlos Echeverry & Ana María Ibáñez & Luis Carlos Hillón, 2004. "The Economics Of Transmilenio, A Mass Transit System For Bogotá," DOCUMENTOS CEDE 003586, UNIVERSIDAD DE LOS ANDES-CEDE.
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  12. de Palma, Andre & Lindsey, Robin, 2002. "Private roads, competition, and incentives to adopt time-based congestion tolling," Journal of Urban Economics, Elsevier, vol. 52(2), pages 217-241, September.
  13. Batarce, Marco & Ivaldi, Marc, 2010. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," TSE Working Papers 10-226, Toulouse School of Economics (TSE), revised Apr 2011.
  14. Batarce, Marco & Ivaldi, Marc, 2010. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," IDEI Working Papers 659, Institut d'Économie Industrielle (IDEI), Toulouse, revised Apr 2011.
  15. Calfee, John & Winston, Clifford, 1998. "The value of automobile travel time: implications for congestion policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 83-102, July.
  16. Batarce, Marco & Ivaldi, Marc, 2011. "Travel Demand Model with Heterogeneous Users and Endogenous Congestion: An application to optimal pricing of bus services," CEPR Discussion Papers 8416, C.E.P.R. Discussion Papers.
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