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Revenue Choice on a Serial Network

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  • David Levinson

    ()
    (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)

Abstract

A model to examine the choice by jurisdiction whether to finance roads with taxes or tolls is developed. The idea of decentralized, local control and multiple jurisdictions distinguishes this analysis from one where a central authority maximizes global welfare. Key factors posited to explain the choice include the length of trips using the roads, the size of the governing jurisdiction, the elasticity of demand to revenue instruments, and the transaction costs of collection - which dictate the size and scope of the free rider problem associated with financing. Spatial complexity in this problem results from the fact that jurisdiction residents use both local and non-local networks, and each jurisdiction's network is used by both local and non-local residents. The central thesis argues that, since jurisdictions try to do well by their residents who are both voters and travelers, the effects of a revenue instrument on local residents is a key consideration in the choice of that revenue instrument. Decentralization of control and lower toll collection costs are identified as conditions under which tolls would more likely become the preferred revenue instrument for highways. .

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File URL: http://nexus.umn.edu/Papers/Serial.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by University of Minnesota: Nexus Research Group in its series Working Papers with number 200001.

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Date of creation: 2000
Date of revision:
Publication status: Published in Journal of Transport Economics and Policy 34,1: 69-98
Handle: RePEc:nex:wpaper:serial

Contact details of provider:
Postal: Dept. of Civil Engineering, 500 Pillsbury Drive SE, Minneapolis, MN 55455
Phone: +01 (612) 625-6354
Fax: +01 (612) 626-7750
Web page: http://nexus.umn.edu
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Cited by:
  1. Barry Ubbels & Erik Verhoef, 2006. "Governmental Competition in Road Charging and Capacity Choice," Tinbergen Institute Discussion Papers 06-036/3, Tinbergen Institute, revised 10 Sep 2007.
  2. Mun, Se-il & Nakagawa, Shintaro, 2010. "Pricing and investment of cross-border transport infrastructure," Regional Science and Urban Economics, Elsevier, vol. 40(4), pages 228-240, July.
  3. Barry Ubbels & Erik Verhoef, 2006. "Governmental Competition in Road Charging and Capacity Choice," Tinbergen Institute Discussion Papers 06-036/3, Tinbergen Institute, revised 10 Sep 2007.
  4. DE BORGER, Bruno & PROOST, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Working Papers 2012014, University of Antwerp, Faculty of Applied Economics.
  5. Lei Zhang & David Levinson & Shanjiang Zhu, 2007. "Agent-Based Model of Price Competition and Product Differentiation on Congested Networks," Working Papers 200809, University of Minnesota: Nexus Research Group.
  6. Levinson, David, 2005. "Micro-foundations of congestion and pricing: A game theory perspective," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(7-9), pages 691-704.
  7. Lei Zhang & David Levinson, 2006. "Economics of Road Network Ownership," Working Papers 200908, University of Minnesota: Nexus Research Group.
  8. McQuaid, Ronald & Grieco, Margaret, 2005. "Edinburgh and the politics of congestion charging: Negotiating road user charging with affected publics," Transport Policy, Elsevier, vol. 12(5), pages 475-476, September.

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