Modelling social welfare effects of relocation and road pricing

Sahar Babri (), David Philip McArthur (), Inge Thorsen () and Jan Ubøe
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Sahar Babri: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
David Philip McArthur: Urban Big Data Centre, University of Glasgow, Postal: University of Glasgow, Urban Big Data Centre, 7 Lilybank Gardens, Glasgow, G12 8RZ, UK, http://www.gla.ac.uk/schools/socialpolitical/staff/davidmcarthur/
Inge Thorsen: Stord/Haugesund University College, Postal: Stord/Haugesund University College, Bjørnsonsgate 45, 5528 Haugesund, Norway

No 2014/42, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: Road pricing is a popular congestion reduction strategy. However, there may be wider impacts associated with a road toll. We consider a factor which is sometimes overlooked, namely that workers and firms may choose to change location in response to changes in the travel costs. A spatial equilibrium model is used to analyse suboptimalities in road pricing which may occur if relocations are ignored. We show that such suboptimalities can be substantial. The advantage of the model we use over many existing approaches is that it is easy to implement, and requires very little data.

Keywords: Relocation; Road pricing; Congestion; Spatial equilibrium modelling; LUTI modelling (search for similar items in EconPapers)
JEL-codes: R23 R41 R48 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-12-18
New Economics Papers: this item is included in nep-geo, nep-tre and nep-ure
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