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Household Transport Demand in a CGE-framework

Author

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  • Charlotte Berg

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Abstract

The main objective of this study is to improve the modelling of household demand for transport services in a Computable General Equilibrium (CGE) model. The new extended model is then used for numerical calculations to test how the Swedish economy reacts to a carbon target. Special attention will be given to distributional effects and the connection between labour supply and work journeys in a sparsely populated country like Sweden. A differentiation between trip purposes and trip length, a complementary relationship between work journeys and labour supply, and a subdivision of households by density of population and income influence the numerical results. Our main conclusions from the analysis of a carbon target are that if the carbon tax revenue is recycled by decreasing the employers’ social contribution fee, welfare costs are lower than with lump-sum replacements of tax revenue to households. The welfare cost may be reduced even further if work journeys are not additionally taxed as compared to the base year. However, the lower total welfare cost is obtained at the expense of making society more unequal, since both labour tax recycling (cuts in employers’ social contributions) and exempting tax on work journeys will make low income groups carry a higher burden. An increased carbon dioxide tax is also shown to increase welfare differences between sparsely populated areas and city regions in Sweden. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Charlotte Berg, 2007. "Household Transport Demand in a CGE-framework," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(3), pages 573-597, July.
  • Handle: RePEc:kap:enreec:v:37:y:2007:i:3:p:573-597
    DOI: 10.1007/s10640-006-9050-y
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    References listed on IDEAS

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    1. Inge Mayeres, 2001. "Equity and transport policy reform," Energy, Transport and Environment Working Papers Series ete0114, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
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    3. Mayeres, Inge & Proost, Stef, 2001. "Marginal tax reform, externalities and income distribution," Journal of Public Economics, Elsevier, vol. 79(2), pages 343-363, February.
    4. Jorgenson, Dale W. & Wilcoxen, Peter J., 1993. "Reducing US carbon emissions: an econometric general equilibrium assessment," Resource and Energy Economics, Elsevier, vol. 15(1), pages 7-25, March.
    5. De Borger, Bruno & Van Dender, Kurt, 2003. "Transport tax reform, commuting, and endogenous values of time," Journal of Urban Economics, Elsevier, vol. 53(3), pages 510-530, May.
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    7. Parry, Ian W H & Bento, Antonio, 2001. " Revenue Recycling and the Welfare Effects of Road Pricing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 645-671, December.
    8. Harrison, Glenn W & Vinod, H D, 1992. "The Sensitivity Analysis of Applied General Equilibrium Models: Completely Randomized Factorial Sampling Designs," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 357-362, May.
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    Citations

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    Cited by:

    1. Johannes Bröcker & Jean Mercenier, 2011. "General Equilibrium Models for Transportation Economics," Chapters,in: A Handbook of Transport Economics, chapter 2 Edward Elgar Publishing.
    2. Keirstead, James & Jennings, Mark & Sivakumar, Aruna, 2012. "A review of urban energy system models: Approaches, challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(6), pages 3847-3866.
    3. Euijune Kim & Geoffrey J.D. Hewings & Hidayat Amir, 2015. "Project Evaluation of Transportation Projects: an Application of Financial Computable General Equilibrium Model," ERSA conference papers ersa15p453, European Regional Science Association.
    4. repec:pal:jorsoc:v:60:y:2009:i:9:d:10.1057_palgrave.jors.2602635 is not listed on IDEAS
    5. Tscharaktschiew, Stefan & Hirte, Georg, 2010. "The drawbacks and opportunities of carbon charges in metropolitan areas -- A spatial general equilibrium approach," Ecological Economics, Elsevier, vol. 70(2), pages 339-357, December.
    6. Berbeglia, Gerardo & Cordeau, Jean-François & Laporte, Gilbert, 2010. "Dynamic pickup and delivery problems," European Journal of Operational Research, Elsevier, vol. 202(1), pages 8-15, April.
    7. repec:eee:rensus:v:78:y:2017:i:c:p:61-71 is not listed on IDEAS
    8. repec:eee:retrec:v:61:y:2017:i:c:p:44-55 is not listed on IDEAS
    9. Hirte, Georg & Tscharaktschiew, Stefan, 2015. "Does labor supply modeling affect findings of transport policy analyses?," Dresden Discussion Paper Series in Economics 01/15, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    10. Wang, Qian & Hubacek, Klaus & Feng, Kuishuang & Wei, Yi-Ming & Liang, Qiao-Mei, 2016. "Distributional effects of carbon taxation," Applied Energy, Elsevier, vol. 184(C), pages 1123-1131.
    11. Jonas Westin, 2011. "Labor Market Effects of Road Pricing in a Population with Continuously Distributed Value of Time," ERSA conference papers ersa10p1458, European Regional Science Association.
    12. repec:kap:netspa:v:17:y:2017:i:3:d:10.1007_s11067-017-9356-z is not listed on IDEAS
    13. Georg Hirte & Stefan Tscharaktschiew, 2015. "Why not to choose the most convenient labor supply model? The impact of labor supply modeling on policy evaluation," ERSA conference papers ersa15p303, European Regional Science Association.
    14. Bröcker, Johannes & Korzhenevych, Artem & Schürmann, Carsten, 2010. "Assessing spatial equity and efficiency impacts of transport infrastructure projects," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 795-811, August.
    15. Samakovlis, Eva, 2008. "How are Green National Accounts Produced in Practice?," Working Papers 105, National Institute of Economic Research.
    16. Braekers, Kris & Caris, An & Janssens, Gerrit K., 2014. "Exact and meta-heuristic approach for a general heterogeneous dial-a-ride problem with multiple depots," Transportation Research Part B: Methodological, Elsevier, vol. 67(C), pages 166-186.

    More about this item

    Keywords

    computable general equilibrium; consumer demand; distributional effects; energy taxation; transport; C68; D12; Q52;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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