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

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Author Info
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

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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.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-03-57.

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Date of creation: 01 Oct 2003
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Handle: RePEc:rff:dpaper:dp-03-57

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Related research
Keywords: traffic congestion congestion pricing value pricing HOT lanes HOV lanes

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Find related papers by JEL classification:
R40 - Urban, Rural, and Regional Economics - - Transportation Systems - - - General
R41 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Transportation: Demand, Supply, and Congestion
R48 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government Pricing; Regulatory Policies
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, 07. [Downloadable!] (restricted)
  2. Small, Kenneth A. & Yan, Jia, 2001. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," Journal of Urban Economics, Elsevier, vol. 49(2), pages 310-336, March. [Downloadable!] (restricted)
    Other versions:
  3. 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. [Downloadable!] (restricted)
    Other versions:
  4. 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. [Downloadable!] (restricted)
  5. Mayeres, Inge & Proost, Stef, 1997. " Optimal Tax and Public Investment Rules for Congestion Type of Externalities," Scandinavian Journal of Economics, Blackwell Publishing, vol. 99(2), pages 261-79, June. [Downloadable!] (restricted)
  6. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May. [Downloadable!] (restricted)
  7. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January. [Downloadable!] (restricted)
  8. Krupnick, Alan & Harrington, Winston & Alberini, Anna, 1998. "Overcoming Public Aversion to Congestion Pricing," Discussion Papers dp-98-27, Resources For the Future. [Downloadable!]
  9. Parry, I. W. H., 2002. "Comparing the efficiency of alternative policies for reducing traffic congestion," Journal of Public Economics, Elsevier, vol. 85(3), pages 333-362, September. [Downloadable!] (restricted)
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  10. Parry, Ian W H & Bento, Antonio, 2001. " Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Blackwell Publishing, vol. 103(4), pages 645-71, December. [Downloadable!] (restricted)
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  11. Erik T. Verhoef, 2000. "Second-Best Congestion Pricing in General Networks - Algorithms for Finding Second-Best Optimal Toll Levels and Toll Points," Tinbergen Institute Discussion Papers 00-084/3, Tinbergen Institute. [Downloadable!]
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  1. Nelson, Peter & Bagliano, Andrew & Harrington, Winston & Safirova, Elena & Lipman, Abram, 2006. "Transit in Washington, D.C.: Current Benefits and Optimal Level of Provision," Discussion Papers dp-06-21, Resources For the Future. [Downloadable!]
    Other versions:
  2. Safirova, Elena A. & Houde, Sébastien & 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. [Downloadable!]
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