Second-best Congestion Pricing Schemes in the Monocentric City

Erik Verhoef

ERSA conference papers from European Regional Science Association

Abstract: This paper considers second-best congestion pricing in the monocentric city, with endogenous residential density and endogenous labour supply. A spatial general equilibrium model is developed that allows consideration of the three-way interactions between urban density, traffic congestion and labour supply. Congestion pricing schemes are analyzed that are second best ‘by design’ (and not because distortions exist elsewhere in the spatial economy), like cordon charging and flat kilometre charges. Both for Cobb-Douglas utility and for CES utility, the analyses suggest that the relative welfare losses from second-best pricing, compared to first-best pricing, are surprisingly small. *Affiliated to the Tinbergen Institute, Roetersstraat 31, 1018 WB Amsterdam. Key words: Traffic congestion, second-best pricing, urban structure, spatial general equilibrium JEL codes: R41, R48, D62

Date: 2004-08
New Economics Papers: this item is included in nep-geo, nep-mic and nep-ure
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Second-best congestion pricing schemes in the monocentric city (2005)
Working Paper: Second-best Congestion Pricing Schemes in the Monocentric City (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa04p408

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