Economics at your fingertips  

The political economy of cordon tolls

Bruno De Borger and Antonio Russo

Journal of Urban Economics, 2018, vol. 105, issue C, 133-148

Abstract: This paper studies the political economy of cordon tolls in a monocentric city consisting of three zones: center, mid-city and suburbs. The cordon toll may give rise to several interrelated conflicts: between residents within and outside the cordon, between car and public transport users, between the rich and the poor and, as the toll capitalizes into rents, between landowners and renters. These conflicts drive all our results. In the short-run, we assume the population is immobile and rents are fixed. With identical individuals, the toll then increases commuting costs only for those outside the cordon. Unless residents within the cordon are the majority, the equilibrium toll resulting from the political process is below the optimal level. Allowing for heterogeneous values of time, rich car commuters prefer a toll higher than socially optimal but, unless access costs to public transit are small, the poor majority prefers a toll below the optimum. When the toll capitalizes into land rents within the cordon, we show that only voters owning land in the center support it. In all scenarios, earmarking revenues for public transport mitigates the effect of the toll on commuting costs, raising voter support. Finally, we find that it is easier to get support for a cordon close to the center than for one further out in the suburbs. We illustrate our results using a calibrated model based on data for Milan.

Keywords: Cordon tolls; Voting; Land market; Public transport subsidies; Milan (search for similar items in EconPapers)
JEL-codes: R41 D78 H23 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Urban Economics is currently edited by S.S. Rosenthal and W.C. Strange

More articles in Journal of Urban Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-05-10
Handle: RePEc:eee:juecon:v:105:y:2018:i:c:p:133-148