On subsidising auto-commuting

Edward Calthrop ()
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Edward Calthrop: K.U.Leuven, C.E.S., Energy, Transport and Environment

Energy, Transport and Environment Working Papers Series from KU Leuven, Department of Economics - Research Group Energy, Transport and Environment

Abstract: Evidence suggests that a considerable proportion of peak-period trips are made for purposes other than for commuting to or from work. Given the different degrees of Hicksian complementarity with the labour market, optimal tax theory suggests that, in a second-best world, different trip purposes should be taxed at different rates. This paper explores this issue and argues for a uniform congestion toll (independent of trip purpose) combined with a subsidy to auto-commuters. A numerical model suggests that while, in the absence of congestion tolls, commuting subsidies are welfare decreasing, an optimal pricing scheme entails auto-commuters receiving a subsidy of nearly 50 per cent of the uniform road toll.

JEL-codes: H23 R41 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2001-07
New Economics Papers: this item is included in nep-ene, nep-ent, nep-net and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:ete:etewps:ete0113

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