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Second-best congestion pricing schemes in the monocentric city

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  • Verhoef, Erik T.

Abstract

This paper considers second-best congestion pricing in the monocentric city, with endogenous residential density and endogenous labour supply. A spatial general equilibrium model is developed that allows consideration of the three-way interactions between urban density, traffic congestion and labour supply. Congestion pricing schemes are analyzed that are second best ‘by design’ (and not because distortions exist elsewhere in the spatial economy), like cordon charging and flat kilometre charges. Both for Cobb-Douglas utility and for CES utility, the analyses suggest that the relative welfare losses from second-best pricing, compared to first-best pricing, are surprisingly small. *Affiliated to the Tinbergen Institute, Roetersstraat 31, 1018 WB Amsterdam. Key words: Traffic congestion, second-best pricing, urban structure, spatial general equilibrium JEL codes: R41, R48, D62
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Verhoef, Erik T., 2005. "Second-best congestion pricing schemes in the monocentric city," Journal of Urban Economics, Elsevier, vol. 58(3), pages 367-388, November.
    • Handle: RePEc:eee:juecon:v:58:y:2005:i:3:p:367-388
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    More about this item

    Keywords

    traffic congestion; second-best pricing; urban structure; spatial general equilibrium jel codes: r41; r48; d62
    (this abstract was borrowed from another version of this item.)    ;
    All these keywords.

    JEL classification:

    • 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
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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