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The cost of congestion and the benefits of congestion pricing: A general equilibrium analysis

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  • Anas, Alex
Abstract
The benefits of congestion pricing are examined with a spatially detailed computable general equilibrium model of the Greater LA region. The model treats choices of roads on a network, of driving or public transit, of residence and job location, of non-work trip patterns, of housing type and size; vacancies and new construction, production, interindustry trade and exports. The aggregate benefit of pricing LA County road congestion increases 2.7 fold when the toll revenue is recycled to cut the income tax of the poorer LA County workers while maintaining region-wide tax revenue neutrality. Consumers get 66% of the aggregate benefit and landlords 41%, while importers suffer losses equal to 7% of the aggregate benefit. Gross regional product increases by 1.34%. The aggregate benefit changes negligibly when the toll revenue is recycled to cut sales taxes instead of the income tax, but gross product still rises by 0.6%. Under the sales tax cut, consumers, importers and landlords benefit more evenly than under the income tax cut, but with the property tax cut nearly all of the cut is capitalized into property values.

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  • Anas, Alex, 2020. "The cost of congestion and the benefits of congestion pricing: A general equilibrium analysis," Transportation Research Part B: Methodological, Elsevier, vol. 136(C), pages 110-137.
    • Handle: RePEc:eee:transb:v:136:y:2020:i:c:p:110-137
    DOI: 10.1016/j.trb.2020.03.003
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    More about this item

    Keywords

    Pigouvian taxation of road congestion; Double dividend; Income tax; Sales tax; Property tax;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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