Russo, Antonio (2011): Congestion pricing, infrastructure investment and redistribution.
Download (292kB) | Preview
We study congestion pricing by a government that has redistributive concerns, in the presence of optimal income taxation. Individuals differ in (unobservable) earning ability and consumption technology for commodities using a congestible network (e.g. roads, Internet). We find, assuming separable preferences, that when efficiency of consumption technology is either invariant or postively correlated with earning ability, low ability individuals should face higher marginal congestion charges than high ability ones. Moreover, reducing congestion (by raising charges or expanding network capacity) enables government to increase redistribution. We also find that means tested congestion pricing may be necessary to implement the second-best allocation.
|Item Type:||MPRA Paper|
|Original Title:||Congestion pricing, infrastructure investment and redistribution|
|Keywords:||congestion pricing; income taxation; redistribution; infrastructure investment|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures ; Other Public Investment and Capital Stock
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation
H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R41 - Transportation: Demand, Supply, and Congestion ; Travel Time ; Safety and Accidents ; Transportation Noise
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies
|Depositing User:||antonio russo|
|Date Deposited:||16. Feb 2011 21:09|
|Last Modified:||20. Feb 2013 07:45|
Atkinson A. and Stiglitz J. (1976), “The Design of Tax Structure: Direct versus Indirect Taxation”. Journal of Public Economics 6 (1976): 55–75.
Becker G. (1965) A theory of the allocation of time, Economic Journal 75, 493–517
Boadway R. and Gahvari F. (2006), Optimal taxation with consumption time as a leisure or labor substitute, Journal of Public Economics 90, 1851–1878
Boadway R. and Keen M. (1993), Public goods, self selection and optimal income taxation, International Economic Review 34, 463-478
Bovenberg L. and Goulder L. (2002), Environmental taxation and regulation. in A. J. Auerbach & M. Feldstein (ed.) Handbook of Public Economics, chapter 23, 1471-1545.
Calthrop E. (2001), On subsidizing auto commuting. CESIfo Working paper N.566
Cremer H., Gahvari F. and Ladoux N. (2001), Second best pollution taxes and the structure of preferences, Southern Economic Journal, 68-2, 258-280
Cremer H., Gahvari F. and Ladoux N. (1998), Externalities and optimal taxation, Journal of Public Economics, 70, 343-364
Cremer H. and Gahvari F. (2002), Nonlinear pricing, redistribution and optimal tax policy, Journal of Public Economic Theory, 4 (2), pp. 139-161
Department for Transport UK (2009), National Travel Survey.
DiMaggio P., Hargittai E., Celeste C. and Shafer S. (2004), Digital Inequality: from unequal access to differentiated use. In K. M. Neckerman (ed.) Social Inequality. Russel Sage. New York.
Engel E., Fischer R. and Galetovic A. (2009), On the efficient provision of roads. Working Paper, Yale University
Freese J., Rivas S. and Hargittai E. (2006), Cognitive ability and Internet use among older adults. Poetics, Volume 34, Issues 4-5, Pages 219-318 (August-October 2006)
Gahvari F.(2007), On optimal commodity taxes when consumption is time consuming, Journal of Public Economic Theory, 9, 1-27
Hu P.S. and Reuscher T. (2004), Summary of travel trends, the 2001 National Household Travel Survey, US Department of Transportation
Kaplow L. (2006), Optimal control of externalities in the presence of income taxation. Harvard Law School Discussion Paper n. 547
Kleven H. J. (2004), Optimum taxation and the allocation of time, Journal of Public Economics, 88, 545-557
Kreiner C. T. and Verdelin N. (2009), Optimal provision of public goods: a synthesis, forthcoming in The Scandinavian Journal of Economics
Leuthold J. H. (1796), The optimal congestion charge when equity matters, Economica, 43, 77-82
Levinson D.(2009), Equity Effects of Road Pricing: A Review. Transport Reviews. 30(1) 33-57
London Research Center (1994), Travel in London: London Area Traffic Survey 1991. HMSO, London.
MacKie-Mason J.K. and Varian H.R. (1995), “Pricing the Internet” in B.Kahin & J.Keller, eds, Public Access to the Internet, Prentice Hall, Englewood Cliffs.
Mayeres I. and Proost S. (1997), Optimal Tax and Public Investment Rules for Congestion Type of Externalities, Scandinavian journal of economics, Vol. 99, No. 2 (Jun., 1997), pp. 261-279
Sandmo A. (1973), Public goods and the technology of consumption, Review of Economic Studies, Vol. 40, N. 4, pp. 517-528
Parry I. (2008), Pricing Urban Congestion. Resources for the Future Discussion Paper N. 08-35.
Parry I. and Bento A. (1999), Revenue Recycling and the Welfare Effects of Road Pricing. Scandinavian Journal of Economics
Small K. and Verhoef E. (2007), The economics of urban transportation. Routledge.
Stiglitz J.E. (1982), Self-selection and Pareto efficient taxation, Journal of Public Economics, 17, 213-40