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Road pricing and investment

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  • Lindsey, Robin

Abstract

Traffic congestion is a bane of modern city life. Transportation economists have long supported road pricing as a tool for controlling congestion and the idea is slowly coming into practice. This paper reviews the theory of congestion pricing and the relationship between optimal congestion tolls and optimal road capacity. It is organized around four questions. Is congestion pricing according to marginal-social-cost principles consistent with covering the costs of road infrastructure? How does road pricing affect optimal road capacity? How does road pricing affect optimal public transportation fares and capacity? Do private toll road operators make socially efficient toll and capacity decisions? The paper concludes with an assessment of long-run trends in travel demand and technology that could alter the evolution of traffic congestion and priorities for road pricing and investment.

Suggested Citation

  • Lindsey, Robin, 2012. "Road pricing and investment," Economics of Transportation, Elsevier, vol. 1(1), pages 49-63.
    • Handle: RePEc:eee:ecotra:v:1:y:2012:i:1:p:49-63
    DOI: 10.1016/j.ecotra.2012.07.001
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