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Manipulable Congestion Tolls

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  • Jan K. Brueckner

    ()

  • Erik T. Verhoef

    () (Department of Spacial Economics, VU University, Amsterdam)

Abstract

The recent literature on congestion pricing with large agents contains a remarkable inconsistency: though agents are large enough to recognize self-imposed congestion and exert market power over prices, they do not take into account the impact of their own actions on the magnitude of congestion tolls. When large agents are confronted with tolls derived under this parametric assumption but understand the rule used to generate them, the toll system will no longer guide the market to the social optimum. To address this problem, the present paper derives alternate, manipulable toll rules, which are designed to achieve the social optimum when agents anticipate the full impact of their actions on toll liabilities.

Suggested Citation

  • Jan K. Brueckner & Erik T. Verhoef, 2009. "Manipulable Congestion Tolls," Working Papers 080915, University of California-Irvine, Department of Economics.
  • Handle: RePEc:irv:wpaper:080915
    as

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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Zhang, Anming & Czerny, Achim I., 2012. "Airports and airlines economics and policy: An interpretive review of recent research," Economics of Transportation, Elsevier, vol. 1(1), pages 15-34.
    2. Silva, Hugo E. & Verhoef, Erik T. & van den Berg, Vincent A.C., 2014. "Airline route structure competition and network policy," Transportation Research Part B: Methodological, Elsevier, vol. 67(C), pages 320-343.
    3. Lin, Ming Hsin, 2013. "Airport privatization in congested hub–spoke networks," Transportation Research Part B: Methodological, Elsevier, vol. 54(C), pages 51-67.
    4. Dementyeva, Maria & Koster, Paul R. & Verhoef, Erik T., 2015. "Regulation of road accident externalities when insurance companies have market power," Journal of Urban Economics, Elsevier, vol. 86(C), pages 1-8.
    5. Silva, Hugo E. & Verhoef, Erik T. & van den Berg, Vincent A.C., 2014. "Airlines’ strategic interactions and airport pricing in a dynamic bottleneck model of congestion," Journal of Urban Economics, Elsevier, vol. 80(C), pages 13-27.
    6. Hoffman, Karla & Berardino, Frank & Hunter, George, 2013. "Congestion pricing applications to manage high temporal demand for public services and their relevance to air space management," Transport Policy, Elsevier, vol. 28(C), pages 28-41.
    7. Vincent A.C. van den Berg & Erik T. Verhoef, 2011. "Is the Service Quality of Private Roads too Low, too High, or just Right when Firms compete Stackelberg in Capacity?," Tinbergen Institute Discussion Papers 11-079/3, Tinbergen Institute, revised 02 Aug 2012.
    8. Czerny, Achim I. & Zhang, Anming, 2014. "Airport peak-load pricing revisited: The case of peak and uniform tolls," Economics of Transportation, Elsevier, vol. 3(1), pages 90-101.
    9. Vincent Van Den Berg, 2011. "The effect of private road supply on the volume/capacity ratio when firms compete Stackelberg in Road Capacity," ERSA conference papers ersa11p1203, European Regional Science Association.
    10. Evangelinos, Christos, 2013. "Interessengruppen und Preissetzung im Verkehr," Discussion Papers 2/2013, Technische Universität Dresden, "Friedrich List" Faculty of Transport and Traffic Sciences, Institute of Transport and Economics.
    11. Achim I. Czerny & Kay Mitusch & Andreas Tanner, 2010. "Priority Rules Versus Scarcity Premiums in Rail Markets," WHU Working Paper Series - Economics Group 10-03, WHU - Otto Beisheim School of Management.
    12. Zhang, Anming & Zhang, Yimin, 2010. "Airport capacity and congestion pricing with both aeronautical and commercial operations," Transportation Research Part B: Methodological, Elsevier, vol. 44(3), pages 404-413, March.
    13. Brueckner, Jan K., 2009. "Price vs. quantity-based approaches to airport congestion management," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 681-690, June.
    14. Erik T. Verhoef, 2012. "Cost Recovery of Congested Infrastructure under Market Power," Tinbergen Institute Discussion Papers 12-064/3, Tinbergen Institute.
    15. repec:eee:transb:v:105:y:2017:i:c:p:174-192 is not listed on IDEAS
    16. repec:eee:juecon:v:101:y:2017:i:c:p:45-56 is not listed on IDEAS
    17. Erik T. Verhoef & Hugo E. Silva, 2015. "Dynamic Equilibrium at a Congestible Facility under Market Power," Tinbergen Institute Discussion Papers 15-045/VIII, Tinbergen Institute.

    More about this item

    Keywords

    Pigouvian taxes; Congestion tolls;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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