 Pareto improvements from Lexus Lanes: The effects of pricing a portion of the lanes on congested highwaysJournal of Public Economics, 2018, vol. 158, issue C, 113-125 Abstract: Though economists have long advocated road pricing as an efficiency-enhancing solution to traffic congestion, it has rarely been implemented, primarily because it is thought to create losers as well as winners. This paper shows that a judiciously designed toll applied to a portion of the lanes of a highway can generate a Pareto improvement before using the revenue, a sufficient condition being that drivers with a high value of time travel at the peak of rush hour. I obtain these new theoretical results by extending a standard dynamic congestion model to reflect an important additional traffic externality: extra traffic does not simply increase travel times, but also introduces frictions that reduce throughput. The analysis draws attention to a practical policy that may help overcome the widespread opposition to road pricing. Keywords: Congestion pricing; Pareto improvement; Value pricing; Externality; Hypercongestion; Sufficient condition (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:158:y:2018:i:c:p:113-125 DOI: 10.1016/j.jpubeco.2018.01.003 Access Statistics for this article Journal of Public Economics is currently edited by R. Boadway and J. Poterba More articles in Journal of Public Economics from Elsevier |
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