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Pricing of Transport Networks, Redistribution and Optimal Taxation

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  • Russo, Antonio

Abstract

We study optimal pricing of roads and public transport in presence of nonlinear in- come taxation. Individuals are heterogeneous in unobservable earning ability. Optimal transport tarifs depend on time costs of travel and work schedule adjustments (days and hours worked per day) as a response to commuting costs. We find that discounts for low income individuals are optimal only if the time cost of a trip is small enough. Lower travel time costs facilitate screening: therefore, redistribution provides an additional motive for congestion pricing. Finally, we investigate the desirability of means-testing of transport tarifs.

Suggested Citation

  • Russo, Antonio, 2012. "Pricing of Transport Networks, Redistribution and Optimal Taxation," TSE Working Papers 12-353, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:25766
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    References listed on IDEAS

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    Cited by:

    1. Chiara Canta & Marie-Louise Leroux, 2016. "Public and Private Hospitals, Congestion, and Redistribution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(1), pages 42-66, February.

    More about this item

    Keywords

    road pricing; public transport pricing; income taxation; meanstesting;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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