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On subsidising auto-commuting

Author

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  • Edward Calthrop

    () (K.U.Leuven, C.E.S., Energy, Transport and Environment)

Abstract

Evidence suggests that a considerable proportion of peak-period trips are made for purposes other than for 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 per cent of the uniform road toll.

Suggested Citation

  • Edward Calthrop, 2001. "On subsidising auto-commuting," Energy, Transport and Environment Working Papers Series ete0113, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
  • Handle: RePEc:ete:etewps:ete0113
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    File URL: http://feb.kuleuven.be/drc/Economics/misc/ete_workingpapers/ete-wp01-13.pdf
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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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