The paper examines the welfare characteristics of second-best alternatives to first-best differentiated road pricing, when it is not possible to achieve optimal tax differentiation. The optimal second-best fee is found to be a weighted average of the first-best differentiated fees, the weights depending on factors such as elasticities and group sizes. The welfare effects of second-best regulation are evaluated.
Topic: 7.2 traffic Congestion
This paper analyses the welfare effects of an optimal time-varying toll imposed during the morning journey to work, employing Vickrey’s bottleneck model and assuming fixed demand.
This paper makes use of a model to investigate two objections to road congestion pricing: it may be inequitable and it generates perverse incentives for governments. The paper investigates how different congestion delay functions and different mixes of traffic affect these objections. The first is sensitive to these features; the second is more pervasive.
The building of more and more roads in cities has left congestion at much the same level as before. A dynamic statistical model is necessary. Policy makers need to be persuaded to take a systems view of all modes: improving one mode may not improve the system as a whole.
The model used by Else, in an article in this Journal in September 1981, is modified to cover the effect on density of the entry and exit of an additional vehicle on a longer road.
A comment on the article in the September 1981 issue of this Journal, with the author’s rejoinder.
The author suggests that congestion varies over short periods. It should be estimated from the number of vehicles on the road, rather than from the flow of traffic.
The author presents a model to estimate the congestion costs created by various types of vehicles and the “optimal” congestion taxes, and shows how these taxes may be modified to allow for external constraints.
Road pricing is found to be regressive or ambiguous in its effects: the large group of lower-income motorists suffers, while gains or smaller losses accrue to wealthy motorists as well as to non-motorists.