The European road pricing game: how to enforce optimal pricing in high-transit countries under asymmetric information

Saskia van der Loo and Stef Proost

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: A federal government tries to force local governments to implement welfare optimal tolling and investment. Welfare optimal tolling requires charging for marginal external costs. Local governments have an incentive to charge more than the marginal social cost whenever there is transit traffic. We analyse the pricing and investment issue in an asymmetric information setting where the local governments have better information than the federal government. The case of air pollution and of congestion are discussed.

Date: 2011-09
New Economics Papers: this item is included in nep-cta, nep-tre and nep-ure
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Journal Article: The European Road Pricing Game: How to Enforce Optimal Pricing in High-transit Countries under Asymmetric Information (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces11.19

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