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Stuck in traffic: Measuring congestion externalities with negative supply shocks

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  • Mosquera, Roberto

Abstract

Congestion is one of the most challenging issues of urban agglomeration. Congestion costs are higher than socially optimal levels, and more information is needed about the key parameters required to design optimal policies. This paper exploits an exogenous reduction in for-hire vehicle supply in New York City to estimate their effect on travel speed and document substitution patterns to other transportation modes. A 9.1 percent decrease in taxis is associated with increased travel speed by 0.45 min per mile, a 7.2 percent increase. Consumer surplus gains from increased speed fade as waiting times increase and people switch to other transportation modes.

Suggested Citation

  • Mosquera, Roberto, 2024. "Stuck in traffic: Measuring congestion externalities with negative supply shocks," Regional Science and Urban Economics, Elsevier, vol. 108(C).
    • Handle: RePEc:eee:regeco:v:108:y:2024:i:c:s0166046224000371
    DOI: 10.1016/j.regsciurbeco.2024.104013
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    More about this item

    Keywords

    Congestion; Travel speed; For-hire vehicles; Welfare trade-offs;
    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
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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