Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
6780747 | Transportation Research Part A: Policy and Practice | 2016 | 9 Pages |
Abstract
This note demonstrates how the redistribution of revenue from a Pigouvian policy can distort incentives and handicap the social objectives of the policy by creating a moral hazard problem. Based on the Levinson (2005) game theory model, I develop a three-player bottleneck congestion game that emulates a repeated prisoner's dilemma and derive efficient tolls. This conceptual game demonstrates the distortionary effects from a revenue-neutral toll policy with lump-sum revenue redistribution and the equity-efficiency tradeoff.
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Authors
Nicholas Janusch,