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Congestion tolling with agglomeration externalities

  • Arnott, Richard

Consider an urban economy with two types of externalities, negative traffic congestion externalities and positive agglomeration externalities deriving from non-market interaction. Suppose that urban travel can be tolled, that non-market interaction cannot be subsidized, and that non-market interaction is stimulated by a reduction in travel costs. Then the optimal toll is below the congestion externality cost. This paper explores this line of reasoning.

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

Volume (Year): 62 (2007)
Issue (Month): 2 (September)
Pages: 187-203

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Handle: RePEc:eee:juecon:v:62:y:2007:i:2:p:187-203
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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