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Pricing Urban Congestion

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  • Parry, Ian W.H.

    () (Resources for the Future)

Abstract

This paper reviews literature on the optimal design of pricing policies to reduce urban automobile congestion. The implications of a range of complicating factors are considered, such as traffic bottlenecks, constraints on which roads and freeway lanes in the road network can be priced, driver heterogeneity, private toll operators, other externalities besides congestion, and interactions between congestion taxes and the broader fiscal system. We also briefly discuss the incidence of congestion taxes and experience with this policy in the United States and elsewhere. Although the economics literature on congestion pricing has advanced considerably over the last 20 years, research is still needed on the empirical measurement of second-best efficient tolls for urban centers and whether alternative design features have substantial implications for efficiency. More research is also needed on the design of schemes to promote feasibility by compensating adversely affected groups with minimal loss in economic efficiency.

Suggested Citation

  • Parry, Ian W.H., 2008. "Pricing Urban Congestion," Discussion Papers dp-08-35, Resources For the Future.
    • Handle: RePEc:rff:dpaper:dp-08-35
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    References listed on IDEAS

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    Cited by:

    1. André de Palma & Robin Lindsey, 2009. "Traffic Congestion Pricing Methods and Technologies," Working Papers hal-00414526, HAL.
    2. Lindsey, Robin, 2012. "Road pricing and investment," Economics of Transportation, Elsevier, vol. 1(1), pages 49-63.
    3. Claudio R. Lucinda & Rodrigo Moita, 2019. "The Political Economy of an Optimal Congestion Tax: An Empirical Investigation," Working Papers, Department of Economics 2019_10, University of São Paulo (FEA-USP).

    More about this item

    Keywords

    traffic congestion; externality; peak-period fee; congestion toll incidence;

    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
    • 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

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