The Economics of Sub-Optimal Policies for Traffic Congestion

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Authors Lucinda, Claudio R.; Moita, Rodrigo M. S.; Meyer, Leandro G.; Ledo, Bruno A.
Journal/Conference Name Journal of Transport Economics and Policy
Paper Category
Paper Abstract Economics prescribes a congestion tax to alleviate the negative effects of traffic congestion. However, traffic congestion is a pervasive problem in cities and a tax is seldom applied. Why? To answer this question, we estimate and simulate the welfare and traffic effects of a congestion tax and a licence plate restriction — a less attractive policy for economists, but far more used in practice. The tax performs better on aggregate. However, while the tax spreads its burden more evenly across the population, the restriction concentrates losses on a smaller group, and has little effect on the rich. These results support both a majority voting and an 'elite capture' argument in favour of the licence plate restriction.
Date of publication 2017
Code Programming Language Stata
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