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Comparing the Efficiency of Alternative Policies for Reducing Traffic Congestion

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  • Parry, Ian

    ()
    (Resources for the Future)

Abstract

This paper compares the efficiency of a single lane toll, a congestion tax applied uniformly across freeway lanes, a gasoline tax, and a transit fare subsidy at reducing traffic congestion. The model incorporates a variety of conditions required to reach an efficient outcome. These include conditions for the efficient allocation of travel among competing modes, travel at peak versus off-peak periods, and drivers with high and low time costs sorted onto faster and slower freeway lanes. Each policy violates some or all of the efficiency conditions. Under wide parameter scenarios, the single lane toll, gasoline tax, and transit subsidy forgo at least two thirds of the efficiency gains under an "ideal" congestion tax that varies across lanes. In contrast, the uniform congestion tax can achieve more than 90 percent of the efficiency gains, despite failing to separate out drivers with high and low time costs onto different freeway lanes.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-00-28.

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Date of creation: 01 Jun 2000
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Handle: RePEc:rff:dpaper:dp-00-28

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References

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  1. Parry, Ian & Bento, Antonio, 1999. "Revenue Recycling and the Welfare Effects of Road Pricing," Discussion Papers dp-99-45, Resources For the Future.
  2. Balasko, Yves, 1997. "Pareto optima, welfare weights, and smooth equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 21(2-3), pages 473-503.
  3. Erik T. Verhoef & Kenneth A. Small, 1999. "Product Differentiation on Roads: Second-Best Congestion Pricing with Heterogeneity under Public and Private Ownership," Tinbergen Institute Discussion Papers 99-066/3, Tinbergen Institute.
  4. Small, Kenneth A. & Gomez-Ilbanez, Jose A., 1998. "Road Pricing for Congestion Management: The Transition from Theory to Policy," University of California Transportation Center, Working Papers qt8kk909p1, University of California Transportation Center.
  5. Small, K.A. & Gomez-Ibanez, J.A., 1996. "Urban Transportation," Papers 95-96-4, California Irvine - School of Social Sciences.
  6. Small, Kenneth A. & Yan, Jia, 2001. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," University of California Transportation Center, Working Papers qt9569k1sz, University of California Transportation Center.
  7. Parry, Ian W. H. & Bento, Antonio, 2002. "Estimating the Welfare Effect of Congestion Taxes: The Critical Importance of Other Distortions within the Transport System," Journal of Urban Economics, Elsevier, vol. 51(2), pages 339-365, March.
  8. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
  9. Newbery, David M, 1990. "Pricing and Congestion: Economic Principles Relevant to Pricing Roads," Oxford Review of Economic Policy, Oxford University Press, vol. 6(2), pages 22-38, Summer.
  10. Harrington, Winston & Krupnick, Alan J. & Alberini, Anna, 2001. "Overcoming public aversion to congestion pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(2), pages 87-105, February.
  11. Liu, Louie Nan & McDonald, John F., 1998. "Efficient Congestion Tolls in the Presence of Unpriced Congestion: A Peak and Off-Peak Simulation Model," Journal of Urban Economics, Elsevier, vol. 44(3), pages 352-366, November.
  12. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January.
  13. Richard Arnott & Kenneth Small, 1993. "The Economics Of Traffic Congestion," Boston College Working Papers in Economics 256, Boston College Department of Economics.
  14. Braid, Ralph M., 1996. "Peak-Load Pricing of a Transportation Route with an Unpriced Substitute," Journal of Urban Economics, Elsevier, vol. 40(2), pages 179-197, September.
  15. Erik T. Verhoef & Kenneth A. Small, 1999. "Product Differentiation on Roads: Second-Best Congestion Pricing with Heterogeneity under Public and Private Ownership," Tinbergen Institute Discussion Papers 99-066/3, Tinbergen Institute.
  16. Glaister, Stephen & Lewis, Davis, 1978. "An integrated fares policy for transport in London," Journal of Public Economics, Elsevier, vol. 9(3), pages 341-355, June.
  17. repec:dgr:uvatin:2099066 is not listed on IDEAS
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Citations

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Cited by:
  1. van den Berg, Vincent & Verhoef, Erik T., 2011. "Winning or losing from dynamic bottleneck congestion pricing?," Journal of Public Economics, Elsevier, vol. 95(7), pages 983-992.
  2. Ian W. H. Parry & Kenneth A. Small, 2005. "Does Britain or the United States Have the Right Gasoline Tax?," American Economic Review, American Economic Association, vol. 95(4), pages 1276-1289, September.
  3. Russo, Antonio, 2013. "Voting on road congestion policy," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 707-724.
  4. Safirova, Elena A. & Houde, S├ębastien & Lipman, D. Abram & Harrington, Winston & Bagliano, Andrew D., 2006. "Congestion Pricing: Long-Term Economic and Land-Use Effects," Discussion Papers dp-06-37, Resources For the Future.
  5. Safirova, Elena & Gillingham, Kenneth & Parry, Ian & Nelson, Peter & Harrington, Winston & Mason, David, 2004. "8. Welfare And Distributional Effects Of Road Pricing Schemes For Metropolitan Washington Dc," Research in Transportation Economics, Elsevier, vol. 9(1), pages 179-206, January.
  6. Parry, Ian, 2001. "How Should Metropolitan Washington, D.C., Finance Its Transportation Deficit?," Discussion Papers dp-01-12, Resources For the Future.
  7. Daniel Albalate & Germa Bel, 2008. "Motorways, tolls and road safety.Evidence from European Panel Data," IREA Working Papers 200802, University of Barcelona, Research Institute of Applied Economics, revised Feb 2008.
  8. Russo, Antonio, 2010. "Voting on traffic congestion policy with two levels of government," MPRA Paper 24776, University Library of Munich, Germany.
  9. Benjamin Edelman, 2009. "Priced and Unpriced Online Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 21-36, Summer.
  10. Quentin David & Renaud Foucart, 2012. "Modal choice and optimal congestion," CREA Discussion Paper Series 12-03, Center for Research in Economic Analysis, University of Luxembourg.
  11. Paul Calcott & Shuntian Yao, 2005. "Competition between highway operators: can we expect toll differentiation?," Economic Growth centre Working Paper Series 0504, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre.
  12. Parry, Ian W.H., 2008. "Pricing Urban Congestion," Discussion Papers dp-08-35, Resources For the Future.
  13. Ioannis Tikoudis & Erik T. Verhoef & Jos N. van Ommeren, 2013. "On Revenue Recycling and the Welfare Effects of Second-Best Congestion Pricing in a Monocentric City," Tinbergen Institute Discussion Papers 13-031/VIII, Tinbergen Institute.
  14. Edward Calthrop, 2001. "On Subsidising Auto-Commuting," CESifo Working Paper Series 566, CESifo Group Munich.
  15. Daniel Albalate & Germa Bel, 2008. "Shaping urban traffic patterns through congestion charging: What factors drive success or failure?," IREA Working Papers 200801, University of Barcelona, Research Institute of Applied Economics, revised Jan 2008.

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