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Estimating welfare effects of congestion charges in real world settings

  • Börjesson, Maria

    ()

    (KTH)

  • Kristoffersson, Ida

    (KTH)

Registered author(s):

    According to the standard textbook analysis, drivers as a group will be worse off with congestion charging if not compensated by revenues. This result is confirmed by an analysis of the Stockholm congestion charging scheme using a static model with homogeneous users. However, both this static model and the standard textbook analysis omit three important factors: taste heterogeneity, effects of charges on the larger network arising from less blocking back of upstream links and the possibility for drivers to reschedule. Taking account of these factors, using a dynamic scheduling model with heterogeneous users estimated and calibrated for Stockholm, we find that drivers as a group benefit from the charging scheme in Stockholm without recycling of revenues. This paper further investigates the importance of the three mentioned factors. We find that all three factors add significantly to the benefit of the charges and that the most important is heterogeneity in the value of travel time savings. This paper also provides an update on the consumer benefits of the Stockholm charges.

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    File URL: http://www.transportportal.se/SWoPEc/CTS2012-13.pdf
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    Paper provided by CTS - Centre for Transport Studies Stockholm (KTH and VTI) in its series Working papers in Transport Economics with number 2012:13.

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    Length: 31 pages
    Date of creation: 03 May 2012
    Date of revision:
    Handle: RePEc:hhs:ctswps:2012_013
    Contact details of provider: Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
    Web page: http://www.cts.kth.se/

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    1. Mogens, Fosgerau & André, de Palma, 2012. "Congestion in a city with a central bottleneck," MPRA Paper 58725, University Library of Munich, Germany.
    2. De Borger, Bruno, 2009. "Commuting, congestion tolls and the structure of the labour market: Optimal congestion pricing in a wage bargaining model," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 434-448, July.
    3. van den Berg, Vincent & Verhoef, Erik T., 2011. "Winning or losing from dynamic bottleneck congestion pricing?: The distributional effects of road pricing with heterogeneity in values of time and schedule delay," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 983-992, August.
    4. Ninette Pilegaard & Mogens Fosgerau, 2008. "Cost Benefit Analysis of a Transport Improvement in the Case of Search Unemployment," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 42(1), pages 23-42, January.
    5. Fosgerau, Mogens & Engelson, Leonid, 2011. "The value of travel time variance," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 1-8, January.
    6. Eliasson, Jonas, 2008. "Lessons from the Stockholm congestion charging trial," Transport Policy, Elsevier, vol. 15(6), pages 395-404, November.
    7. Glazer, Amihai & Niskanen, Esko, 2000. "Which consumers benefit from congestion tolls?," University of California Transportation Center, Working Papers qt70v033nx, University of California Transportation Center.
    8. Parry, Ian & Bento, Antonio, 1999. "Revenue Recycling and the Welfare Effects of Road Pricing," Discussion Papers dp-99-45, Resources For the Future.
    9. Anderstig, Christer & Berglund, Svante & Eliasson, Jonas & Andersson, Matts & Pyddoke, Roger, 2012. "Congestion charges and labour market imperfections: “Wider economic benefits” or “losses”?," Working papers in Transport Economics 2012:4, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    10. Eliasson, Jonas & Hultkrantz, Lars & Nerhagen, Lena & Rosqvist, Lena Smidfelt, 2009. "The Stockholm congestion - charging trial 2006: Overview of effects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(3), pages 240-250, March.
    11. Börjesson, Maria & Eliasson, Jonas & Hugosson, Muriel & Brundell-Freij, Karin, 2012. "The Stockholm congestion charges – five years on. Effects, acceptability and lessons learnt," Working papers in Transport Economics 2012:3, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    12. Prud'homme, Rémy & Bocarejo, Juan Pablo, 2005. "The London congestion charge: a tentative economic appraisal," Transport Policy, Elsevier, vol. 12(3), pages 279-287, May.
    13. Rich, Jeppe & Nielsen, Otto Anker, 2007. "A socio-economic assessment of proposed road user charging schemes in Copenhagen," Transport Policy, Elsevier, vol. 14(4), pages 330-345, July.
    14. Eliasson, Jonas, 2009. "A cost-benefit analysis of the Stockholm congestion charging system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 468-480, May.
    15. Erik T. Verhoef & Kenneth A. Small, 2004. "Product Differentiation on Roads," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(1), pages 127-156, January.
    16. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
    17. Hutlkrantz, Lars & Armelius, Hanna, 2005. "The Politico-Economic Link Between Public Transport And Road Pricing: An Ex-Ante Study Of The Stockholm Road-Pricing Trial," Working Papers 2005:8, Örebro University, School of Business.
    18. Fosgerau, Mogens & Karlström, Anders, 2010. "The value of reliability," Transportation Research Part B: Methodological, Elsevier, vol. 44(1), pages 38-49, January.
    19. Ida Kristoffersson & Leonid Engelson, 2009. "A Dynamic Transportation Model for the Stockholm Area: Implementation Issues Regarding Departure Time Choice and OD-pair Reduction," Networks and Spatial Economics, Springer, vol. 9(4), pages 551-573, December.
    20. Kurt Van Dender, 2003. "Transport Taxes with Multiple Trip Purposes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(2), pages 295-310, 06.
    21. Small, Kenneth A, 1982. "The Scheduling of Consumer Activities: Work Trips," American Economic Review, American Economic Association, vol. 72(3), pages 467-79, June.
    22. Raux, Charles, 2005. "Comments on 'The London congestion charge: a tentative economic appraisal' ()," Transport Policy, Elsevier, vol. 12(4), pages 368-371, July.
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