EconStor >
University of Oslo >
Department of Economics, University of Oslo >
Memorandum, Department of Economics, University of Oslo >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/47312
  
Title:A discrete-choice model approach to optimal congestion charge PDF Logo
Authors:Strøm, Steinar
Vislie, Jon
Issue Date:2008
Series/Report no.:Memorandum // Department of Economics, University of Oslo 2008,9
Abstract:We model the choice of transportation mode in a simplified Hotelling-like city, with a fixed number of total travellers, fixed road capacity and with no trade-off between when to travel and the time spent in a queue. A person that chooses to take her own car will inflict a congestion cost on all travellers. To get the travellers to internalise these external costs, a congestion charge has to be imposed. We derive an optimal congestion charge within in a discrete-choice framework, with a benevolent government maximising expected tax-adjusted social surplus. The congestion charge to be imposed on private driving, beyond the opportunity cost - equal to the fare on public transportation - is shown to be a weighted average of a Ramsey-like term (capturing the goal to raise public revenue) and a Pigou-term capturing the environmental cost of a person's private driving. This property is similar to the optimal environmental tax derived by Sandmo (1975). However, the behavioural assumption underlying the present framework is quite different from the standard theory of consumer choice adopted by Sandmo.
Subjects:Discrete choice
urban transport
congestion
congestion charges
JEL:D11
H23
L13
L91
Document Type:Working Paper
Appears in Collections:Memorandum, Department of Economics, University of Oslo

Files in This Item:
File Description SizeFormat
565317946.pdf413.93 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/47312

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.