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Welfare and Distributional Effects of Road Pricing Schemes for Metropolitan Washington, DC

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  • Parry, Ian

    (Resources for the Future)

  • Harrington, Winston

    (Resources for the Future)

  • Nelson, Per-Kristian

    (Resources for the Future)

  • Safirova, Elena

    (Resources for the Future)

  • Mason, Dave
  • Gillingham, Kenneth

Abstract

Economists have long advocated congestion pricing as an efficient way of allocating scarce roadway capacity. However, with a few exceptions, congestion tolls are rarely used in practice and strongly opposed by the public and elected officials. Although high implementation costs and privacy issues are alleviated as appropriate technologies are developed, the concerns that congestion pricing will adversely affect low-income travelers remain. In this paper, we use a strategic transportation planning model calibrated for the Washington, DC, metropolitan area to compare the welfare and distributional effects of three pricing schemes: value pricing (HOT lanes), limited congestion pricing, and comprehensive congestion pricing. We find that social welfare gains from HOT lanes amount to three-quarters of those from the comprehensive road pricing. At the same time, a HOT lanes policy turns out to be much more equitable than other road pricing schemes, with all income groups strictly benefiting even before the toll revenue is recycled.

Suggested Citation

  • Parry, Ian & Harrington, Winston & Nelson, Per-Kristian & Safirova, Elena & Mason, Dave & Gillingham, Kenneth, 2003. "Welfare and Distributional Effects of Road Pricing Schemes for Metropolitan Washington, DC," RFF Working Paper Series dp-03-57, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-03-57
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    Cited by:

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    2. Konishi, Hideo & Mun, Se-il, 2010. "Carpooling and congestion pricing: HOV and HOT lanes," Regional Science and Urban Economics, Elsevier, vol. 40(4), pages 173-186, July.
    3. Safirova, Elena & Gillingham, Kenneth & Houde, Sébastien, 2007. "Measuring marginal congestion costs of urban transportation: Do networks matter?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(8), pages 734-749, October.
    4. Bureau, Benjamin & Glachant, Matthieu, 2008. "Distributional effects of road pricing: Assessment of nine scenarios for Paris," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(7), pages 994-1007, August.
    5. Mogens Fosgerau & Kurt Van Dender, 2013. "Road pricing with complications," Transportation, Springer, vol. 40(3), pages 479-503, May.
    6. Farrell, Niall, 2017. "What Factors Drive Inequalities in Carbon Tax Incidence? Decomposing Socioeconomic Inequalities in Carbon Tax Incidence in Ireland," Ecological Economics, Elsevier, vol. 142(C), pages 31-45.
    7. Nelson, Peter & Baglino, Andrew & Harrington, Winston & Safirova, Elena & Lipman, Abram, 2007. "Transit in Washington, DC: Current benefits and optimal level of provision," Journal of Urban Economics, Elsevier, vol. 62(2), pages 231-251, September.
    8. Omid M. Rouhani, 2016. "Next Generations of Road Pricing: Social Welfare Enhancing," Sustainability, MDPI, vol. 8(3), pages 1-15, March.
    9. Harrington, Winston & Safirova, Elena & Coleman, Conrad & Houde, Sebastien & Finkel, Adam M., 2014. "Distributional Consequences of Public Policies: An Example from the Management of Urban Vehicular Travel Abstract: This paper uses a spatially disaggregated computable general equilibrium model of a l," RFF Working Paper Series dp-14-04, Resources for the Future.
    10. Callan, Tim & Lyons, Sean & Scott, Susan & Tol, Richard S.J. & Verde, Stefano, 2009. "The distributional implications of a carbon tax in Ireland," Energy Policy, Elsevier, vol. 37(2), pages 407-412, February.
    11. Gemechu, E.D. & Butnar, I. & Llop, M. & Castells, F., 2012. "Environmental tax on products and services based on their carbon footprint: A case study of the pulp and paper sector," Energy Policy, Elsevier, vol. 50(C), pages 336-344.
    12. Tovar Reaños, Miguel A. & Sommerfeld, Katrin, 2018. "Fuel for inequality: Distributional effects of environmental reforms on private transport," Resource and Energy Economics, Elsevier, vol. 51(C), pages 28-43.
    13. Safirova, Elena A. & Houde, Sébastien & Harrington, Winston, 2007. "Spatial Development and Energy Consumption," RFF Working Paper Series dp-07-51, Resources for the Future.
    14. M Rouhani, Omid, 2016. "Social welfare analysis of HOV to HOT conversion," MPRA Paper 75816, University Library of Munich, Germany.
    15. DeCorla-Souza, Patrick, 2005. "A New Public-Private Partnership Model for Road Pricing Implementation," 46th Annual Transportation Research Forum, Washington, D.C., March 6-8, 2005 208207, Transportation Research Forum.
    16. Börjesson, Maria & Eliasson, Jonas & Rubensson, Isak, 2020. "Distributional effects of public transport subsidies," Journal of Transport Geography, Elsevier, vol. 84(C).
    17. Hymel, Kent, 2009. "Does traffic congestion reduce employment growth?," Journal of Urban Economics, Elsevier, vol. 65(2), pages 127-135, March.
    18. Kristoffersson, Ida & Engelson, Leonid & Börjesson, Maria, 2017. "Efficiency vs equity: Conflicting objectives of congestion charges," Transport Policy, Elsevier, vol. 60(C), pages 99-107.
    19. Safirova, Elena A. & Houde, Sébastien & Lipman, D. Abram & Harrington, Winston & Bagliano, Andrew D., 2006. "Congestion Pricing: Long-Term Economic and Land-Use Effects," RFF Working Paper Series dp-06-37, Resources for the Future.
    20. Vandyck, Toon & Rutherford, Thomas F., 2018. "Regional labor markets, commuting, and the economic impact of road pricing," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 217-236.
    21. Lucia Rotaris & Alessandro Gardelli, 2018. "Carbon Tax acceptability: A comparative experimental analysis," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2018(1), pages 117-132.
    22. Tovar Reaños, Miguel A. & Wölfing, Nikolas M., 2018. "Household energy prices and inequality: Evidence from German microdata based on the EASI demand system," Energy Economics, Elsevier, vol. 70(C), pages 84-97.
    23. Wu, T. & Thomassin, P.J., 2018. "The Impact of Carbon Tax on Food Prices and Consumption in Canada," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275913, International Association of Agricultural Economists.
    24. Rouhani, Omid M. & Knittel, Christopher R. & Niemeier, Debbie, 2014. "Road Supply in Central London: Addition of an Ignored Social Cost," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 53(1).
    25. Kristoffersson, Ida & Engelson, Leonid, 2016. "Efficiency and equity of congestion charges," Working papers in Transport Economics 2016:7, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

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    More about this item

    Keywords

    traffic congestion; congestion pricing; value pricing; HOT lanes; HOV lanes;
    All these keywords.

    JEL classification:

    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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