On revenue recycling and the welfare effects of second-best congestion pricing in a monocentric city

Abstract

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Equilibrium and first-best city with endogenous exposure to local air pollution from traffic

“…We now characterize the first-best optimum where a planner internalizes the pollution exposure externality. Analyses of both optimum pricing schemes and their effects on optimum city structures in the context of traffic-induced externalities are dominantly found in congestion literature within discrete (Brueckner, 2014) or continuous space (Tikoudis et al, 2015;Verhoef, 2005;Vickrey, 1969). In the context of traffic-induced air pollution, only McConnell and Straszheim (1982) and Robson (1976) compare equilibrium and optimum city structures.…”

Second-Best Urban Tolls in a Monocentric City with Housing Market Regulations

“…The analytical model presented in this section is based to the models used in Verhoef (2005) and Tikoudis et al (2013). 6 The extension uses elements from Bertaud and Brueckner (2005) and Muth (1969).…”

“…The calibration of the unregulated equilibrium (hereafter, the free market equilibrium) seeks to create a city that, despite the model's abstract nature, resembles reality as closely as possible, in line with Tikoudis et al (2013). We set the parameters such that equilibrium characterizes a quite sprawled (40 kilometers), congested metropolitan area in absence of government intervention.…”

“…housing taxation, mortgage interest deduction) and quantity-restriction policies (e.g., regulated building height, zoning). Although the impact of tax-induced distortions in urban labor markets on optimal road pricing has received some attention in the recent literature (Parry and Bento, 2001;Mayeres and Proost, 2001;Tikoudis et al, 2013), the associated impact of imperfectly functioning land and housing markets on the latter has remained under-researched. Empirical observation suggests that, in a substantial part of the world, quantity restrictions are common.…”

“…4 In the current paper, a monocentric city framework is expanded to incorporate congestion as in Verhoef (2005) and, more recently, Tikoudis et al (2013). A numerical version of the model is calibrated such that the benchmark equilibrium reproduces a set of stylized facts that characterize a representative monocentric city in the Western world, in absence of congestion charges.…”