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How Should Passenger Travel in Mexico City Be Priced?

Ian Parry () and Govinda R. Timilsina ()

Discussion Papers from Resources For the Future

Abstract: This paper uses an analytical-simulation model to examine the optimal extent and welfare effects of pricing reforms for passenger transportation in Mexico City. The model incorporates travel by auto, microbus, public bus, and rail, plus externalities from local and global air pollution, traffic congestion, and road accidents. In our benchmark case, the optimal gasoline tax is $2.72 (29.6 pesos) per gallon, or 16 times the current tax. However, a per-mile toll would reduce traffic congestion, the largest externality, more directly, and we put the optimized auto toll at 20.3 cents per mile. Tolls should also be imposed on microbuses even though the welfare gains are relatively modest, as are those from reforming public transit fares.

Keywords: gasoline taxes; mileage tolls; transit subsidy; pollution; congestion; Mexico City; welfare effects (search for similar items in EconPapers)
JEL-codes: R48 H21 H23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-ure
Date: 2008-06-15
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http://www.rff.org/RFF/documents/RFF-DP-08-17.pdf (application/pdf)

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Journal Article: How should passenger travel in Mexico City be priced? (2010) Downloads
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