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Road pricing with complications

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  • Mogens Fosgerau
  • Kurt Van Dender

Abstract

The rationale for congestion charges is that by internalising the marginal external congestion cost, they restore efficiency in the transport market. In the canonical model underlying this view, congestion is a static phenomenon, users are taken to be homogenous, there is no travel time risk, and a highly stylised model of congestion is used. The simple analysis also ignores that real pricing schemes are only rough approximations to ideal systems and that inefficiencies in related markets potentially affect the case for congestion charges. The canonical model tends to understate the marginal external congestion cost because it ignores user heterogeneity and trip timing inefficiencies. With respect to the relevance of interactions between congestion and congestion charges and tax distortions and distributional concerns, recent insights point out that there is no general case for modifying charges for such interactions. Therefore the simple Pigouvian rule remains a good first approximation for the design of road charging systems. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Mogens Fosgerau & Kurt Van Dender, 2013. "Road pricing with complications," Transportation, Springer, vol. 40(3), pages 479-503, May.
    • Handle: RePEc:kap:transp:v:40:y:2013:i:3:p:479-503
    DOI: 10.1007/s11116-012-9442-5
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    Cited by:

    1. Heyndrickx, Christophe & Vanheukelom, Toon & Proost, Stef, 2021. "Distributional impact of a regional road pricing scheme in Flanders," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 116-139.
    2. Proost, Stef & Van Dender, Kurt, 2012. "Energy and environment challenges in the transport sector," Economics of Transportation, Elsevier, vol. 1(1), pages 77-87.
    3. Mogens Fosgerau & Kurt Van Dender, 2013. "Road pricing with complications," Transportation, Springer, vol. 40(3), pages 479-503, May.
    4. Kristoffersson, Ida, 2013. "Impacts of time-varying cordon pricing: Validation and application of mesoscopic model for Stockholm," Transport Policy, Elsevier, vol. 28(C), pages 51-60.
    5. Stephane Hess & Andrew Daly (ed.), 2014. "Handbook of Choice Modelling," Books, Edward Elgar Publishing, number 14820.
    6. Ida Kristoffersson & Leonid Engelson, 2011. "Modifications of the Stockholm congestion pricing scheme and effects on different user groups," ERSA conference papers ersa10p1455, European Regional Science Association.
    7. Leonid Engelson & Dirk van Amelsfort, 2015. "The role of volume-delay functions in forecasting and evaluating congestion charging schemes: the Stockholm case," Transportation Planning and Technology, Taylor & Francis Journals, vol. 38(6), pages 684-707, August.
    8. Jonas Westin, 2011. "Labor Market Effects of Road Pricing in a Population with Continuously Distributed Value of Time," ERSA conference papers ersa10p1458, European Regional Science Association.
    9. Li, Zhi-Chun & Huang, Hai-Jun & Yang, Hai, 2020. "Fifty years of the bottleneck model: A bibliometric review and future research directions," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 311-342.
    10. Jean-Philippe Meloche, 2019. "Towards a New Era in Road Pricing? Lessons from the Experience of First Movers," CIRANO Working Papers 2019s-35, CIRANO.
    11. Juan de Dios Ortúzar & Elisabetta Cherchi & Luis Ignacio Rizzi, 2014. "Transport research needs," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 29, pages 688-698, Edward Elgar Publishing.
    12. Kristoffersson, Ida & Engelson, Leonid, 2016. "Efficiency and equity of congestion charges," Working papers in Transport Economics 2016:7, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

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