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Are road pricing schemes efficient in polycentric cities with endogenous workplace locations?
[Les systèmes de tarification routière sont-ils efficaces dans les villes polycentriques avec des lieux d'emplois endogènes ?]

Author

Listed:
  • Romain Gaté

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

This article aims to measure the efficiency of different road pricing schemes (Pigouvian tax, flat tax and cordon toll) to address congestion externalities when the locations of jobs and dwellings within a city are endogenous. The model captures the fact that commuters face a trade-off between taking advantage of the wage premium in the Central Business District (CBD) and being stuck in traffic. I find that the Pigouvian tax strategy is not a social optimum due to the presence of two market failures in the urban economy: congestion and misallocation of jobs within the city. A Pigouvian tax on commuters cannot solve two different problems simultaneously, namely, reducing the congestion level given the locations of jobs and reaching the optimal spatial allocation of firms. Without regulation, the number of jobs in the CBD is too high (and the congestion cost is excessive), while the Pigouvian tax generates a CBD that is too small. In addition, a flat tax is not necessarily worse than a Pigouvian tax, in contrast to the cordon toll.

Suggested Citation

  • Romain Gaté, 2024. "Are road pricing schemes efficient in polycentric cities with endogenous workplace locations? [Les systèmes de tarification routière sont-ils efficaces dans les villes polycentriques avec des lieux," Working Papers hal-04882564, HAL.
    • Handle: RePEc:hal:wpaper:hal-04882564
    Note: View the original document on HAL open archive server: https://hal.science/hal-04882564v1
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