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Individual uncertainty and the political acceptability of road pricing policies

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  • Marcucci, Edoardo
  • Marini, Marco

Abstract

This paper investigates the issue of political feasibility of a road pricing policies (RPP). Referring to a literature developed in international trade theory (Fernandez and Rodrick, 1991), this paper presents a model regarding the role and relevance of individual specific uncertainty in explaining the political acceptability of RPP. It is shown that: a) without money transfers, i.e., reimbursements of the tax levied, and with no uncertainty, RPP might not be accepted thus giving rise to an evident trade-off between economic efficiency and political acceptability; b) when individual specific uncertainty is assumed, optimal level of RPP, may, under given conditions concerning the number of voters and people preferences, become politically acceptable. Two different strategies can be envisaged to render RPP politically feasible: gradual and radical. The first strategy foresees a low corrective tax that eliminates only a small proportion of the excessive use of the public good and provides an acceptable balance between monetary loss and environment improvement. Alternatively, a radical strategy would foresee a much higher level of tax substantially reducing the number of people consuming the public good and providing a potentially higher and concentrated payoff to those still consuming it after the policy is implemented. This latter policy appears more easily sustainable under majority than unanimity voting.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 30751.

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Date of creation: 2001
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Handle: RePEc:pra:mprapa:30751

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Keywords: transport pricing; road pricing; specific uncertainty;

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  1. Jens Schade & Bernhard Schlag, 2000. "Acceptability of Urban Transport Pricing," Research Reports 72, Government Institute for Economic Research Finland (VATT).
  2. Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, American Economic Association, vol. 81(5), pages 1146-55, December.
  3. P M Jones, 1991. "UK public attitudes to urban traffic problems and possible countermeasures: a poll of polls," Environment and Planning C: Government and Policy, Pion Ltd, London, Pion Ltd, London, vol. 9(3), pages 245-256, June.
  4. Zax, Jeffrey S, 1989. "Is There a Leviathan in Your Neighborhood?," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 560-67, June.
  5. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(4), pages 642-64, August.
  6. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 85(3), pages 473-91, June.
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