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Congestion Tolling with Agglomeration Externalities

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  • Richard Arnott

    (Boston College)

Abstract

Consider an urban economy with two types of externalities, negative traffic congestion externalities and positive agglomeration externalities deriving from non-market interaction. Suppose that urban travel can be tolled, that non-market interaction cannot be subsidized, and that non-market interaction is stimulated by a reduction in travel costs. Then the optimal toll is below the congestion externality cost. This paper explores this line of reasoning.

Suggested Citation

  • Richard Arnott, 2007. "Congestion Tolling with Agglomeration Externalities," Boston College Working Papers in Economics 660, Boston College Department of Economics.
    • Handle: RePEc:boc:bocoec:660
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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