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The European road pricing game: how to enforce optimal pricing in high-transit countries under asymmetric information

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  • Saskia VAN DER LOO
  • Stef PROOST

Abstract

A federal government tries to force local governments to implement welfare optimal tolling and investment. Welfare optimal tolling requires charging for marginal external costs. Local governments have an incentive to charge more than the marginal social cost whenever there is transit traffic. We analyse the pricing and investment issue in an asymmetric information setting where the local governments have better information than the federal government. The case of air pollution and of congestion are discussed.

Suggested Citation

  • Saskia VAN DER LOO & Stef PROOST, 2011. "The European road pricing game: how to enforce optimal pricing in high-transit countries under asymmetric information," Working Papers Department of Economics ces11.19, KU Leuven, Faculty of Economics and Business, Department of Economics.
  • Handle: RePEc:ete:ceswps:ces11.19
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    Cited by:

    1. Mandell, Svante & Proost, Stef, 2016. "Why truck distance taxes are contagious and drive fuel taxes to the bottom," Journal of Urban Economics, Elsevier, vol. 93(C), pages 1-17.
    2. Bruno Borger & Stef Proost, 2016. "The political economy of pricing and capacity decisions for congestible local public goods in a federal state," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(5), pages 934-959, October.
    3. De Borger, Bruno & Proost, Stef, 2016. "Can we leave road pricing to the regions? -The role of institutional constraints," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 208-222.
    4. repec:bla:presci:v:96:y:2017:i:2:p:401-422 is not listed on IDEAS
    5. Stef Proost & Jonas Westin, 2017. "Race to the top in traffic calming," Papers in Regional Science, Wiley Blackwell, vol. 96(2), pages 401-422, June.
    6. De Borger, Bruno & Proost, Stef, 2013. "Traffic externalities in cities: The economics of speed bumps, low emission zones and city bypasses," Journal of Urban Economics, Elsevier, vol. 76(C), pages 53-70.

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