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How Should Passenger Travel in Mexico City Be Priced?

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  • Parry, Ian W.H.

    () (Resources for the Future)

  • Timilsina, Govinda R.

Abstract

This paper uses an analytical-simulation model to examine the optimal extent and welfare effects of pricing reforms for passenger transportation in Mexico City. The model incorporates travel by auto, microbus, public bus, and rail, plus externalities from local and global air pollution, traffic congestion, and road accidents. In our benchmark case, the optimal gasoline tax is $2.72 (29.6 pesos) per gallon, or 16 times the current tax. However, a per-mile toll would reduce traffic congestion, the largest externality, more directly, and we put the optimized auto toll at 20.3 cents per mile. Tolls should also be imposed on microbuses even though the welfare gains are relatively modest, as are those from reforming public transit fares.

Suggested Citation

  • Parry, Ian W.H. & Timilsina, Govinda R., 2008. "How Should Passenger Travel in Mexico City Be Priced?," Discussion Papers dp-08-17, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-08-17
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    References listed on IDEAS

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    Cited by:

    1. Blackman, Allen & Osakwe, Rebecca & Alpizar, Francisco, 2010. "Fuel tax incidence in developing countries: The case of Costa Rica," Energy Policy, Elsevier, vol. 38(5), pages 2208-2215, May.
    2. Adam T. Jones, 2016. "Mileage tax, property tax, sales tax, or fee: the best way to pay for commercial infrastructure that isn’t free," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 36(1), pages 81-98, February.
    3. Dulal, Hari Bansha & Shah, Kalim U. & Sapkota, Chandan & Uma, Gengaiah & Kandel, Bibek R., 2013. "Renewable energy diffusion in Asia: Can it happen without government support?," Energy Policy, Elsevier, vol. 59(C), pages 301-311.
    4. Anas, Alex & Timilsina, Govinda R. & Zheng, Siqi, 2009. "An analysis of various policy instruments to reduce congestion, fuel consumption and CO2 emissions in Beijing," Policy Research Working Paper Series 5068, The World Bank.
    5. Li, Shanjun & Kahn, Matthew E. & Nickelsburg, Jerry, 2015. "Public transit bus procurement: The role of energy prices, regulation and federal subsidies," Journal of Urban Economics, Elsevier, vol. 87(C), pages 57-71.
    6. Hakim Hammadou & Claire Papaix, 2015. "Policy packages for modal shift and CO2 reduction in Lille, France," Working Papers 1501, Chaire Economie du climat.
    7. Parry, Ian W.H. & Timilsina, Govinda R., 2012. "Demand side instruments to reduce road transportation externalities in the greater Cairo metropolitan area," Policy Research Working Paper Series 6083, The World Bank.
    8. Rizzi, Luis Ignacio & De La Maza, Cristobal, 2017. "The external costs of private versus public road transport in the Metropolitan Area of Santiago, Chile," Transportation Research Part A: Policy and Practice, Elsevier, vol. 98(C), pages 123-140.
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    More about this item

    Keywords

    gasoline taxes; mileage tolls; transit subsidy; pollution; congestion; Mexico City; welfare effects;

    JEL classification:

    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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