Commuting choices and congestion taxes in industrializing Indonesia

This research identifies determinants of commuters’ transport mode decisions and the impact of hypothesized congestion taxes for the dense Central Business District of Jakarta, Indonesia. We first estimate commuters’ modal choices and time valuation through primary survey data then use these results to assess the efficiency and equity effects of congestion taxes. Higher taxes systematically result in higher levels of efficiency gains in terms of aggregate expected utility, but with widely varying distributional implications. Understanding the equity tradeoffs of such efficiency-enhancing high taxes is especially important in countries with large low-income populations. The findings also underscore the sensitivity of decisions among competing transport modes in such an industrializing country setting, which are remarkably distinct despite lower time valuations relative to industrialized country contexts.