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Revenue-recycling within Transport Networks

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  • Yukihiro Kidokoro

    (National Graduate Institute for Policy Studies)

Abstract

This paper analyzes the second-best pricing and investment policy for transport networks with a revenue-recycling mechanism in which the toll revenue is used as transport investments or subsidies, as in London’s congestion charging scheme. The results of this paper demonstrate that the way toll revenue is used significantly modifies the usual results, where a lump-sum transfer is assumed. First, revenue-recycling as investment has an effect that works to increase the second-best toll when the benefits from it are larger than the costs. Revenue-recycling as a subsidy does not have such an effect. Second, ‘partial’ cost?benefit analysis that focuses only on the targeted transport mode would usually lead to a false conclusion as to whether the toll revenues should be used as transport investments, subsidies, or general tax revenues. The ‘full’ cost? benefit analysis, which includes changes in consumer surplus and producer surplus in all transport modes, is necessary.

Suggested Citation

  • Yukihiro Kidokoro, 2008. "Revenue-recycling within Transport Networks," GRIPS Discussion Papers 08-07, National Graduate Institute for Policy Studies.
    • Handle: RePEc:ngi:dpaper:08-07
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    Cited by:

    1. De Borger, Bruno & Proost, Stef, 2012. "A political economy model of road pricing," Journal of Urban Economics, Elsevier, vol. 71(1), pages 79-92.
    2. Tikoudis, Ioannis & Verhoef, Erik T. & van Ommeren, Jos N., 2015. "On revenue recycling and the welfare effects of second-best congestion pricing in a monocentric city," Journal of Urban Economics, Elsevier, vol. 89(C), pages 32-47.
    3. Lindsey, Robin, 2012. "Road pricing and investment," Economics of Transportation, Elsevier, vol. 1(1), pages 49-63.
    4. François Mirabel & Mathias Reymond, 2011. "The urban toll revenue recycling : what is the optimal share distributed towards mass transit system?," Working Papers hal-01830227, HAL.
    5. Gu, Yizhen & Deakin, Elizabeth & Long, Ying, 2017. "The effects of driving restrictions on travel behavior evidence from Beijing," Journal of Urban Economics, Elsevier, vol. 102(C), pages 106-122.
    6. Fageda, Xavier & Flores-Fillol, Ricardo & Theilen, Bernd, 2022. "Price versus quantity measures to deal with pollution and congestion in urban areas: A political economy approach," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).

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    More about this item

    Keywords

    Congestion tax; Revenue-recycling; Road pricing; Transport Network; Costbenefit analysis;
    All these keywords.

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General

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