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Welfare Losses of Road Congestion

Author

Listed:
  • Antonio Russo
  • Martin W. Adler
  • Federica Liberini
  • Jos N. van Ommeren
Abstract
We estimate the marginal external congestion cost of motor-vehicle travel for Rome, Italy, using a methodology that accounts for hypercongestion (a situation where congestion decreases a road’s throughput). We show that the external cost – even when roads are not hypercongested – is substantial, equaling about two thirds of the private (time) cost of travel. About one third of this cost is borne by public transport users. Most roads are never hypercongested, but some are hypercongested for more than one hour per day. Hypercongestion accounts for about 40 percent of congestion-related welfare losses. Welfare losses incurred on roads that are hypercongested are substantial, predominantly because of a reduction in speed rather than throughput. Our results suggest policies that reduce congestion can result in important welfare gains.

Suggested Citation

  • Antonio Russo & Martin W. Adler & Federica Liberini & Jos N. van Ommeren, 2019. "Welfare Losses of Road Congestion," CESifo Working Paper Series 7693, CESifo.
    • Handle: RePEc:ces:ceswps:_7693
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    References listed on IDEAS

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    Cited by:

    1. Anderson, Michael L. & Davis, Lucas W., 2020. "An empirical test of hypercongestion in highway bottlenecks," Journal of Public Economics, Elsevier, vol. 187(C).
    2. Martin W Adler & Federica Liberini & Antonio Russo & Jos N. van Ommeren, 2021. "The congestion relief benefit of public transit: evidence from Rome," Journal of Economic Geography, Oxford University Press, vol. 21(3), pages 397-431.
    3. Anupriya, & Bansal, Prateek & Graham, Daniel J., 2023. "Congestion in cities: Can road capacity expansions provide a solution?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 174(C).

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    More about this item

    Keywords

    marginal external congestion cost; deadweight loss; hypercongestion; public transport;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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