IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v85y2002i3p333-362.html
   My bibliography  Save this article

Comparing the efficiency of alternative policies for reducing traffic congestion

Author

Listed:
  • Parry, I. W. H.

Abstract

This paper compares the efficiency of a single lane toll, a congestion tax applied uniformly across freeway lanes, a gasoline tax, and a transit fare subsidy at reducing traffic congestion. The model incorporates a variety of conditions required to reach an efficient outcome. These include conditions for the efficient allocation of travel among competing modes, travel at peak versus off-peak periods, and drivers with high and low time costs sorted onto faster and slower freeway lanes. Each policy violates some or all of the efficiency conditions. Under wide parameter scenarios, the single lane toll, gasoline tax, and transit subsidy forgo at least two thirds of the efficiency gains under an "ideal" congestion tax that varies across lanes. In contrast, the uniform congestion tax can achieve more than 90 percent of the efficiency gains, despite failing to separate out drivers with high and low time costs onto different freeway lanes.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • 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.
    • Handle: RePEc:eee:pubeco:v:85:y:2002:i:3:p:333-362
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047-2727(00)00163-8
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Braid, Ralph M., 1996. "Peak-Load Pricing of a Transportation Route with an Unpriced Substitute," Journal of Urban Economics, Elsevier, vol. 40(2), pages 179-197, September.
    2. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
    3. Small, Kenneth A. & Gomez-Ibanez, Jose A., 1999. "Urban transportation," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.),Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 46, pages 1937-1999, Elsevier.
    4. Glaister, Stephen & Lewis, Davis, 1978. "An integrated fares policy for transport in London," Journal of Public Economics, Elsevier, vol. 9(3), pages 341-355, June.
    5. 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.
    6. Verhoef, E.T. & Small, K.A., 1999. "Product Differentiation on Roads Second-Best Congestion Pricing with Heterogeneity under Public and Private Ownership," Papers 99-00-01, California Irvine - School of Social Sciences.
    7. Harrington, Winston & Krupnick, Alan J. & Alberini, Anna, 2001. "Overcoming public aversion to congestion pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(2), pages 87-105, February.
    8. 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.
    9. Ian W. H. Parry & Antonio Bento, 2001. "Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 645-671, December.
    10. Newbery, David M, 1990. "Pricing and Congestion: Economic Principles Relevant to Pricing Roads," Oxford Review of Economic Policy, Oxford University Press, vol. 6(2), pages 22-38, Summer.
    11. 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.
    12. Harrington, Winston & Krupnick, Alan J. & Alberini, Anna, 1998. "Overcoming Public Aversion to Congestion Pricing," Discussion Papers 10730, Resources for the Future.
    13. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January.
    14. Richard Arnott & Kenneth Small, 1993. "The Economics Of Traffic Congestion," Boston College Working Papers in Economics 256, Boston College Department of Economics.
    15. Balasko, Yves, 1997. "Pareto optima, welfare weights, and smooth equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 21(2-3), pages 473-503.
    16. Small, Kenneth A. & Gomez-Ilbanez, Jose A., 1998. "Road Pricing for Congestion Management: The Transition from Theory to Policy," University of California Transportation Center, Working Papers qt8kk909p1, University of California Transportation Center.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Safirova, Elena & Gillingham, Kenneth & Parry, Ian & Nelson, Peter & Harrington, Winston & Mason, David, 2004. "8. Welfare And Distributional Effects Of Road Pricing Schemes For Metropolitan Washington Dc," Research in Transportation Economics, Elsevier, vol. 9(1), pages 179-206, January.
    2. Ian W. H. Parry & Kenneth A. Small, 2005. "Does Britain or the United States Have the Right Gasoline Tax?," American Economic Review, American Economic Association, vol. 95(4), pages 1276-1289, September.
    3. Russo, Antonio, 2013. "Voting on road congestion policy," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 707-724.
    4. Ioannis Tikoudis, 2015. "Congestion Pricing in Urban Polycentric Networks with Distorted Labor Markets: A Spatial General Equilibrium Model for the Area Randstad," Tinbergen Institute Discussion Papers 15-085/VIII, Tinbergen Institute, revised 26 Oct 2017.
    5. David, Quentin & Foucart, Renaud, 2014. "Modal choice and optimal congestion," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 12-20.
    6. Coria, Jessica & Bonilla, Jorge & Grundström, Maria & Pleijel, Håkan, 2015. "Air pollution dynamics and the need for temporally differentiated road pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 75(C), pages 178-195.
    7. Parry, Ian W.H., 2001. "How Should Metropolitan Washington, DC, Finance Its Transportation Deficit?," Discussion Papers 10552, Resources for the Future.
    8. Agarwal, Sumit & Koo, Kang Mo & Sing, Tien Foo, 2015. "Impact of electronic road pricing on real estate prices in Singapore," Journal of Urban Economics, Elsevier, vol. 90(C), pages 50-59.
    9. Feifei Qin & Xiaoning Zhang, 2015. "Designing an Optimal Subsidy Scheme to Reduce Emissions for a Competitive Urban Transport Market," Sustainability, MDPI, Open Access Journal, vol. 7(9), pages 1-16, August.
    10. Paul Calcott & Shuntian Yao, 2005. "Competition between highway operators: can we expect toll differentiation?," Economic Growth Centre Working Paper Series 0504, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    11. Daniel Albalate & Germa Bel, 2008. "Motorways, tolls and road safety.Evidence from European Panel Data," IREA Working Papers 200802, University of Barcelona, Research Institute of Applied Economics, revised Feb 2008.
    12. Geir H. M. Bjertnæs, 2017. "The efficient combination of taxes on fuel and vehicles," Discussion Papers 867, Statistics Norway, Research Department.
    13. van den Berg, Vincent & Verhoef, Erik T., 2011. "Winning or losing from dynamic bottleneck congestion pricing?," Journal of Public Economics, Elsevier, vol. 95(7), pages 983-992.
    14. Tikoudis, Ioannis & Verhoef, Erik T. & van Ommeren, Jos N., 2015. "On revenue recycling and the welfare effects of second-best congestion pricing in a monocentric city," Journal of Urban Economics, Elsevier, vol. 89(C), pages 32-47.
    15. Edward Calthrop, 2001. "On Subsidising Auto-Commuting," CESifo Working Paper Series 566, CESifo.
    16. Ian W.H. Parry, 2009. "Pricing Urban Congestion," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 461-484, September.
    17. 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.
    18. Fu, Shihe & Gu, Yizhen, 2017. "Highway toll and air pollution: Evidence from Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 32-49.
    19. Russo, Antonio, 2010. "Voting on traffic congestion policy with two levels of government," MPRA Paper 24776, University Library of Munich, Germany.
    20. Benjamin Edelman, 2009. "Priced and Unpriced Online Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 21-36, Summer.
    21. Daniel Albalate & Germa Bel, 2008. "Shaping urban traffic patterns through congestion charging: What factors drive success or failure?," IREA Working Papers 200801, University of Barcelona, Research Institute of Applied Economics, revised Jan 2008.
    22. Ioannis Tikoudis, 2020. "Second‐Best Road Taxes in Polycentric Networks with Distorted Labor Markets," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(1), pages 391-428, January.
    23. Geir H. M. Bjertnaes, 2017. "The Efficient Combination of Taxes on Fuel and Vehicles," CESifo Working Paper Series 6789, CESifo.
    24. Claudio R. Lucinda & Rodrigo Moita, 2019. "The Political Economy of an Optimal Congestion Tax: An Empirical Investigation," Working Papers, Department of Economics 2019_10, University of São Paulo (FEA-USP).

    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:85:y:2002:i:3:p:333-362. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.