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On Subsidising Auto-Commuting

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  • Edward Calthrop

Abstract

Evidence suggests that a considerable proportion of peak period trips are made for purposes other than commuting to or from work.given the different degrees of Hicksian complementarity with the labour market, optimal tax theory suggests that, in a second-best world, different trip purposes should be taxed at different rates. This paper explores this issue and argues for a uniform congestion toll (independent of trip-purpose) combined with a subsidy to auto-commuters. A numerical model suggests that while, in the absence of congestion tolls, commuting subsidies are welfare decreasing, an optimal pricing scheme entails auto-commuters receiving a subsidy of nearly 50 percent of the uniform road toll.

Suggested Citation

  • Edward Calthrop, 2001. "On Subsidising Auto-Commuting," CESifo Working Paper Series 566, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_566
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    File URL: http://www.cesifo-group.de/DocDL/cesifo_wp566.pdf
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    References listed on IDEAS

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    Cited by:

    1. Tscharaktschiew, Stefan & Hirte, Georg, 2012. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 285-309.
    2. Hirte, Georg & Tscharaktschiew, Stefan, 2015. "Does labor supply modeling affect findings of transport policy analyses?," Dresden Discussion Paper Series in Economics 01/15, Technische Universit├Ąt Dresden, Faculty of Business and Economics, Department of Economics.
    3. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "Income tax deduction of commuting expenses in an urban CGE study: The case of German cities," Transport Policy, Elsevier, vol. 28(C), pages 11-27.
    4. Mayeres, Inge & Proost, Stef & Dender, Kurt Van, 2005. "The Impacts of Marginal Social Cost Pricing," Research in Transportation Economics, Elsevier, vol. 14(1), pages 211-243, January.
    5. Matthias Wrede, 2003. "Tax Deductibility of Commuting Expenses and Residential Land Use with more than one Center," CESifo Working Paper Series 972, CESifo Group Munich.

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