Marginal Social Cost Pricing on a Transportation Network: Comparison of Second-Best Policies

Elena Safirova, Sébastien Houde and Winston Harrington

Discussion Papers from Resources For the Future

Abstract: In this paper we evaluate and compare long-run economic effects of six road-pricing schemes aimed at internalizing social costs of transportation. In order to conduct this analysis, we employ a spatially disaggregated general equilibrium model of a regional economy that incorporates decisions of residents, firms, and developers, integrated with a spatially-disaggregated strategic transportation planning model that features mode, time period, and route choice. The model is calibrated to the greater Washington, DC metropolitan area. We compare two social cost functions - one restricted to congestion alone and another that accounts for other external effects of transportation. We find that when the ultimate policy goal is a reduction in the complete set of motor vehicle externalities, cordon-like policies and variable-toll policies lose some attractiveness compared to policies based primarily on mileage. We also find that full social cost pricing requires very high toll levels and therefore is bound to be controversial.

Keywords: traffic congestion; social cost pricing; land use; welfare analysis; road pricing; general equilibrium; simulation; Washington DC (search for similar items in EconPapers)
JEL-codes: Q53 Q54 R13 R41 R48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-geo and nep-ure
Date: 2008-01-09
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