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Assessment of the Introduction of Road Pricing Using a Computable General Equilibrium Model

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  • Knud Munk

Abstract

The introduction of road pricing has important budgetary and income distributional consequences. In countries like Denmark, due to high marginal rates of taxation, raising government revenue and redistributing income is associated with substantial distortionary and administrative costs. This paper argues that an evaluation of the introduction of road pricing needs to take into account not only the effects on congestion and on the environment, but also the effects on the government’s budget and the income distributional consequences and therefore should be undertaken within a general equilibrium framework. A stylized Computable General Equilibrium (CGE) model which represents the interaction of the consumption of transport and of traffic congestion with leisure is used to illustrate this point. Model simulations show that the introduction of road pricing may be associated with a double dividend and make it desirable to reduce transport infrastructure, and furthermore, although decreasing road congestion, increase the environmental damage.
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  • Knud Munk, 2000. "Assessment of the Introduction of Road Pricing Using a Computable General Equilibrium Model," Regional and Urban Modeling 283600065, EcoMod.
    • Handle: RePEc:ekd:002836:283600065
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    References listed on IDEAS

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    Cited by:

    1. MUNK, Knud J., 2011. "Optimal taxation in the presence of a congested public good and an application to transport policy," LIDAM Discussion Papers CORE 2011057, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Dorothée Boccanfuso & Marcelin Joanis & Mathieu Paquet & Luc Savard, 2015. "The impact of infrastructure on productivity: new estimates for Québec," Cahiers de recherche Classification-JEL: C13, , Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    3. Robson, Edward N. & Wijayaratna, Kasun P. & Dixit, Vinayak V., 2018. "A review of computable general equilibrium models for transport and their applications in appraisal," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 31-53.
    4. Proque, Andressa Lemes & Betarelli Junior, Admir Antonio & Perobelli, Fernando Salgueiro, 2022. "Fuel tax, cross subsidy and transport: Assessing the effects on income and consumption distribution in Brazil," Research in Transportation Economics, Elsevier, vol. 95(C).

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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other

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