Regional labor markets, commuting, and the economic impact of road pricing
Toon Vandyck and
Thomas F. Rutherford
Regional Science and Urban Economics, 2018, vol. 73, issue C, 217-236
Cities provide the benefits that come with economic density but often face congested traffic and high unemployment. In this paper, we study economy-wide and distributional implications of congestion pricing in the presence of agglomeration externalities and unemployment. We develop a spatial general equilibrium model to show that indirect effects of time-invariant congestion tolls can lead to welfare losses for low-skilled urban residents by changing commuting patterns of high-skilled workers. Next, we reveal a set of policy designs that improve welfare across space and worker skill levels by combining time-sensitive road pricing, transport network capacity expansions, and toll revenue redistribution.
Keywords: Road pricing; Agglomeration externalities; Second best; General equilibrium; Equity; Regional labor markets (search for similar items in EconPapers)
JEL-codes: H20 J61 R00 D58 D60 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:73:y:2018:i:c:p:217-236
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