Road pricing with limited information and heterogeneous users: A successful case

Jonas Eliasson (jonas.eliasson@liu.se)

The Annals of Regional Science, 2001, vol. 35, issue 4, 595-604

Abstract: Since strictly optimal (first-best) road pricing policies require information that we will probably never have, it is important to investigate what can be done under more restrictive assumptions as to what information is available. One such case is examined in this paper, where the main restrictive assumptions are that all users have the same choice set and that all alternatives have the same monetary cost. Individuals have utility functions with constant marginal utilities of time and money, but these marginal utilities vary across individuals, and are assumed to be unobservable. We show that for this model, any toll reform that reduces aggregate travel time and redistributes the toll revenues equally to all users makes everyone better off. This holds regardless of the distribution of marginal utilities of time and money, and for any road network.

JEL-codes: R40 (search for similar items in EconPapers)
Date: 2002-02-22
Note: Received: November 1999/Accepted: July 2001
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Citations: View citations in EconPapers (2)

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