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Pricing Urban Congestion

Author

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  • Ian W.H. Parry

    (Resources for the Future, Washington, D.C. 20036)

Abstract
This paper reviews literature on the optimal design of pricing policies to reduce urban automobile congestion. The implications of a range of complicating factors are considered; these include traffic bottlenecks, constraints on which roads and freeway lanes in the road network can be priced, driver heterogeneity, private toll operators, other externalities besides congestion, and interactions between congestion taxes and the broader fiscal system. I also briefly discuss the incidence of congestion taxes and experience with this policy in the United States and elsewhere. Although the economics literature on congestion pricing has advanced considerably over the past 20 years, research is still needed on the empirical measurement of second-best efficient tolls for urban centers and whether alternative design features have substantial implications for efficiency. More research is also needed on the design of schemes to promote feasibility by compensating adversely affected groups with minimal loss in economic efficiency.

Suggested Citation

  • Ian W.H. Parry, 2009. "Pricing Urban Congestion," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 461-484, September.
    • Handle: RePEc:anr:reseco:v:1:y:2009:p:461-484
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    References listed on IDEAS

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    Cited by:

    1. André de Palma & Robin Lindsey, 2009. "Traffic Congestion Pricing Methods and Technologies," Working Papers hal-00414526, HAL.
    2. Linn, Joshua & McConnell, Virginia & Pesek, Sophie & Raimi, Daniel, 2023. "Transportation Taxes and Energy Transitions: Alternative Policy Designs for Funding US Road Infrastructure and Pricing Externalities," RFF Working Paper Series 23-09, Resources for the Future.
    3. Loder, Allister & Bliemer, Michiel C.J. & Axhausen, Kay W., 2022. "Optimal pricing and investment in a multi-modal city — Introducing a macroscopic network design problem based on the MFD," Transportation Research Part A: Policy and Practice, Elsevier, vol. 156(C), pages 113-132.
    4. Lindsey, Robin, 2012. "Road pricing and investment," Economics of Transportation, Elsevier, vol. 1(1), pages 49-63.
    5. Asplund, Disa & Pyddoke, Roger, 2019. "Optimal pricing of car use in a small city: a case study of Uppsala," Papers 2019:2, Research Programme in Transport Economics.
    6. Claudio R. Lucinda & Rodrigo Moita, 2019. "The Political Economy of an Optimal Congestion Tax: An Empirical Investigation," Working Papers, Department of Economics 2019_10, University of São Paulo (FEA-USP).

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    More about this item

    Keywords

    traffic congestion; externality; peak-period fee; congestion toll incidence;
    All these keywords.

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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