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A free rider problem? The effect of electric vehicles on urban toll prices in Norway

Author

Listed:
  • Lana Krehic

    (Department of Economics, Norwegian University of Science and Technology)

Abstract

Several cities around the world try to internalise congestion costs from road traffic by instituting charges for entering their city centres. The revenues collected from these charges are often redistributed to improve conditions for motorists, cy- clists, pedestrians and public transport. At the same time, many schemes allow for exemption of cleaner vehicles, which might offset the reduction in congestion and reduce revenue. In this paper, I assess the effects of exempting electric vehicles from charge on the charge level. Using panel data of Norwegian cities with urban toll rings, I exploit regional variation, and and that a higher share of electric vehicles increase toll charges. The results imply that owners of conventional cars pay 2.5 NOK (0.3 USD) more per passing because of the exemption. The estimates are robust to variations in estimation method and sample. As the majority of electric vehicle owners have above-average income, exempting electric cars from toll charges suggests a distribution effect that have implications for social welfare.

Suggested Citation

  • Lana Krehic, 2019. "A free rider problem? The effect of electric vehicles on urban toll prices in Norway," Working Paper Series 17819, Department of Economics, Norwegian University of Science and Technology.
    • Handle: RePEc:nst:samfok:17819
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    File URL: http://www.svt.ntnu.no/ISO/WP/2019/2_19.pdf
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    References listed on IDEAS

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    3. Severin Borenstein & Lucas W. Davis, 2016. "The Distributional Effects of US Clean Energy Tax Credits," Tax Policy and the Economy, University of Chicago Press, vol. 30(1), pages 191-234.
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    Keywords

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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