Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7369598 | Journal of Public Economics | 2018 | 13 Pages |
Abstract
Though economists have long advocated road pricing as an efficiency-enhancing solution to traffic congestion, it has rarely been implemented, primarily because it is thought to create losers as well as winners. This paper shows that a judiciously designed toll applied to a portion of the lanes of a highway can generate a Pareto improvement before using the revenue, a sufficient condition being that drivers with a high value of time travel at the peak of rush hour. I obtain these new theoretical results by extending a standard dynamic congestion model to reflect an important additional traffic externality: extra traffic does not simply increase travel times, but also introduces frictions that reduce throughput. The analysis draws attention to a practical policy that may help overcome the widespread opposition to road pricing.
Keywords
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Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Jonathan D. Hall,