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Time Consistency of Congestion Tolls

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  • Glazer, Amihai

Abstract

Consider users who can choose between using two modes of travel (say a road and mass transit), and who can choose to incur a fixed cost that reduces the future cots of using mass transit. A congestion toll on the road may serve two purposes. First, it can induce users in the current period to use transit instead of the congested road. Second, users who anticipate the imposition of tolls may be induced to incur the aforementioned fixed cost, thereby reducing demand for use of the congested road in future periods. This paper focuses on such investment decisions, showing that when government cannot credibly commit to future tolls, the optimal road toll in each period may be low and congestion may be high.

Suggested Citation

  • Glazer, Amihai, 2000. "Time Consistency of Congestion Tolls," University of California Transportation Center, Working Papers qt22d6v77r, University of California Transportation Center.
    • Handle: RePEc:cdl:uctcwp:qt22d6v77r
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    Cited by:

    1. Peter A. Watt, 2003. "Voluntary Roads And Streets," Economic Affairs, Wiley Blackwell, vol. 23(2), pages 3-9, June.
    2. Kono Tatsuhito & Notoya Hiromichi, 2012. "Is Mandatory Project Evaluation Always Appropriate? Dynamic Inconsistencies of Irreversible and Reversible Projects," Journal of Benefit-Cost Analysis, De Gruyter, vol. 3(1), pages 1-31, January.
    3. Tatsuhito Kono & Naoki Kitamura & Kiyoshi Yamasaki & Kazuki Iwakami, 2016. "Quantitative analysis of dynamic inconsistencies in infrastructure planning: an example of coastal levee improvement," Environment and Planning B, , vol. 43(2), pages 401-418, March.
    4. Robin Lindsey, 2010. "Reforming Road User Charges: A Research Challenge For Regional Science," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 471-492, February.

    More about this item

    Keywords

    Architecture;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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