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Congestion Pricing, Carpooling, and Commuter Welfare

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Listed:
  • Michael Ostrovsky
  • Michael Schwarz

Abstract

Building on the canonical "bottleneck" model of Vickrey (1969), we show that carpooling and road pricing are highly complementary in addressing traffic congestion: they can be much more effective jointly than each one separately, and can improve commuter welfare without having to rely on the redistribution of government revenue. By contrast, technological advances that make time in traffic more comfortable or productive (e.g., self-driving cars), implemented without additional economic incentives, may result in zero improvement in social welfare.

Suggested Citation

  • Michael Ostrovsky & Michael Schwarz, 2025. "Congestion Pricing, Carpooling, and Commuter Welfare," NBER Working Papers 34261, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:34261
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    More about this item

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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