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Transport tax reform, commuting, and endogenous values of time

  • De Borger, Bruno
  • Van Dender, Kurt

We consider a model of urban transport with two trip purposes, commuting (assumed perfectly complementary to labour supply) and non-commuting, to analyse the effects of transport tax reform on the value of time and marginal external congestion costs. Higher commuting taxes plausibly reduce time values, but higher non-commuting transport prices will typically raise the value of time. The intuition for this latter finding is that the reduction in congestion that follows from the tax increase itself raises net wages per hour of work (inclusive of commuting time). Empirical illustrations with Belgian data show a potentially large effect of transport tax reform on time values. In quite a few of the tax reforms studied traffic levels are reduced, but the increase in time values implies that marginal external congestion costs actually increase.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 53 (2003)
Issue (Month): 3 (May)
Pages: 510-530

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Handle: RePEc:eee:juecon:v:53:y:2003:i:3:p:510-530
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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