The Welfare Effects of Cordon Pricing and Area Pricing Simulation with a Multi-regional General Equilibrium Model
This paper analyses the welfare effects of cordon pricing and area pricing through numerical simulations with a multi-regional general equilibrium model. The toll policies achieve approximately 60 per cent of the efficiency gains from the Pigouvian congestion tax. Cordon pricing is better if long-distance commuting is prevalent, while area pricing is better if a city has a large central urban area. With the introduction of cordon pricing or area pricing, a toll district becomes more attractive as a residential place but less attractive as a workplace. The toll policies promote short-distance commuting but discourage the use of public transport in toll-free commutes. © 2011 LSE and the University of Bath
Volume (Year): 45 (2011)
Issue (Month): 3 (September)
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