How Should Passenger Travel in Mexico City Be Priced?

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How Should Passenger Travel in Mexico City Be Priced?

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Parry, Ian W.H. () (Resources for the Future)
Timilsina, Govinda R.

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Abstract

This paper uses an analytical-simulation model to examine the optimal extent and welfare effects of pricing reforms for passenger transportation in Mexico City. The model incorporates travel by auto, microbus, public bus, and rail, plus externalities from local and global air pollution, traffic congestion, and road accidents. In our benchmark case, the optimal gasoline tax is $2.72 (29.6 pesos) per gallon, or 16 times the current tax. However, a per-mile toll would reduce traffic congestion, the largest externality, more directly, and we put the optimized auto toll at 20.3 cents per mile. Tolls should also be imposed on microbuses even though the welfare gains are relatively modest, as are those from reforming public transit fares.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-08-17.

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Date of creation: 15 Jun 2008
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Handle: RePEc:rff:dpaper:dp-08-17

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Find related papers by JEL classification:
R48 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government Pricing; Regulatory Policies
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-08-21 (All new papers)
NEP-GEO-2008-08-21 (Economic Geography)
NEP-URE-2008-08-21 (Urban & Real Estate Economics)

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Other versions:
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