Manipulable Congestion Tolls

Jan Brueckner and Erik Verhoef

No 80915, Working Papers from University of California-Irvine, Department of Economics

Abstract: The recent literature on congestion pricing with large agents contains a remarkable inconsistency: though agents are large enough to recognize self-imposed congestion and exert market power over prices, they do not take into account the impact of their own actions on the magnitude of congestion tolls. When large agents are confronted with tolls derived under this parametric assumption but understand the rule used to generate them, the toll system will no longer guide the market to the social optimum. To address this problem, the present paper derives alternate, manipulable toll rules, which are designed to achieve the social optimum when agents anticipate the full impact of their actions on toll liabilities.

Keywords: Pigouvian taxes; Congestion tolls (search for similar items in EconPapers)
JEL-codes: H23 L9 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2009-01
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Manipulable congestion tolls (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:irv:wpaper:080915

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