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Optimal Car-related Taxes and Pricing in Beijing Considering the Marginal Cost of Public Funds

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  • Yoshida, Jun
  • Kono, Tatsuhito

Abstract

This paper optimizes fuel tax, car ownership tax, highway tolls, and peak-time area pricing in Beijing with explicit consideration of marginal costs of public funds arising from these taxes and pricing. We establish two scenarios: scenario 1 optimizes the two taxes, tolls, and area pricing simultaneously; scenario 2 optimizes the two taxes and tolls without area pricing. Using Beijing’s parameters obtained from previous studies, our calculation results show that 1) the optimal area pricing is 50 CNY/entry; 2) Scenario 1 reduces the number of cars in peak time by more than 50%, but scenario 2 reduces it by 10%; 3) regardless of area pricing, fuel tax should be higher and car ownership tax lower. We do some sensitivity analyses to demonstrate the possible ranges of the tax and pricing instruments.

Suggested Citation

  • Yoshida, Jun & Kono, Tatsuhito, 2020. "Optimal Car-related Taxes and Pricing in Beijing Considering the Marginal Cost of Public Funds," MPRA Paper 101728, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:101728
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    References listed on IDEAS

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    1. Joto, Keigo & Konagane, Joji & Kono, Tatsuhito & Kuwahara, Masao, 2020. "Optimal Location-dependent Pricing Policies on Railways and Roads in a Continuous City," MPRA Paper 100446, University Library of Munich, Germany.

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    More about this item

    Keywords

    Optimal taxation; Marginal cost of public funds; Externality; Area pricing;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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