Which Consumers Benefit from Congestion Tolls?

Amihai Glazer and Esko Niskanen

No 216, Discussion Papers from Government Institute for Economic Research Finland (VATT)

Abstract: A large literature demonstrates that congestion tolls can increase aggregate welfare. Nevertheless, congestion tolls are rarely observed. And though road tolls are imposed to raise revenue (as on bridges, tunnels, and some highways), almost always the tolls are imposed on the faster of several alternative modes. Thus highways designed for fast travel may be tolled, but local roads on the same route are not tolled. Governments often charge fees at airports (the fast mode) but not tolls on a road connecting the same cities. The paper explicitly considers reassignment, extending ear-lier studies by considering two congestible modes. This introduces novel considerations: a toll on a slow mode, rather than inducing some people to stop travelling, may instead cause some to shift to the other mode; and a toll on the fast mode may cause users to switch to the slow mode, in-ducing some former users of the slow mode to travel less. These effects can cause a toll on the fast mode to be more politically attractive than a toll on the slow mode.

Keywords: Congestion tolls; route choice; consumer welfare (search for similar items in EconPapers)
JEL-codes: D60 R41 D10 H54 (search for similar items in EconPapers)
Date: 2000-03-17
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