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Transport tax reform, commuting and endogenous values of time

Listed author(s):
  • Bruno De Borger

    ()

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

  • Kurt Van Dender

    (University of California, Irvine)

Previous studies of transport tax reform have typically assumed that the reform itself does not affect the marginal value of time. In this paper we consider a model of urban transport with two trip purposes, commuting and non-commuting, to analyse the effects of transport tax reform on the value of time and marginal external congestion costs. The theoretical results suggest that the assumption of multiple trip purposes implies that these effects are non-trivial. Consequently, assuming exogenous time values may lead to inaccurate estimates of optimal congestion taxes and of the welfare effects of transport tax reform. Empirical work using Belgian data illustrates the potentially large effect of transport tax reform on time values. In fact, the majority of the tax reform exercises studied reduce traffic levels but raise time values and marginal external congestion costs.

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File URL: http://feb.kuleuven.be/drc/Economics/misc/ete_workingpapers/ete-wp-2002-07.pdf
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Paper provided by KU Leuven, Department of Economics - Research Group Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0207.

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Length: 35 pages
Date of creation: Sep 2002
Handle: RePEc:ete:etewps:ete0207
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Web page: http://feb.kuleuven.be/Economics
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  1. Gronau, Reuben, 1977. "Leisure, Home Production, and Work-The Theory of the Allocation of Time Revisited," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1099-1123, December.
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  12. Glaister, Stephen & Lewis, Davis, 1978. "An integrated fares policy for transport in London," Journal of Public Economics, Elsevier, vol. 9(3), pages 341-355, June.
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  14. Bovenberg, A Lans & Goulder, Lawrence H, 1996. "Optimal Environmental Taxation in the Presence of Other Taxes: General-Equilibrium Analyses," American Economic Review, American Economic Association, vol. 86(4), pages 985-1000, September.
  15. Wrede, Matthias, 2001. "Should Commuting Expenses Be Tax Deductible? A Welfare Analysis," Journal of Urban Economics, Elsevier, vol. 49(1), pages 80-99, January.
  16. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January.
  17. Kurt Van Dender, 2001. "Testing alternative transport pricing policies for Brussels," Chapters, in: Reforming Transport Pricing in the European Union, chapter 11 Edward Elgar Publishing.
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