
This paper examines congestion taxes in a monocentric city with pre-existing labor taxation. When road toll revenue is used to finance labor tax cuts, 35% of the optimal road tax in our numerical model does not reflect marginal external congestion costs, but rather functions as a Ramsey-Mirrlees tax, i.e. an efficiency enhancing mechanism allowing for an indirect spatial differentiation of the labor tax. This adds a quite different motivation to road pricing, since welfare gains can be produced even in absence of congestion. We find that the optimal road tax is non-monotonic across space, reflecting the different impacts of labor supply elasticity and marginal utility of income, which both vary over space. The relative efficiencies of some archetype second-best pricing schemes (cordon toll, flat kilometer tax) are high (84% and 70% respectively). When road toll revenue is recycled lump-sum, the optimal toll lies below its Pigouvian level. Extensions in a bimodal framework show that the optimality of using road toll revenue to subsidize public transport depends on the initial inefficiency in public transport pricing.
revenue recycling, R41, ddc:330, H23, Second-best road pricing, R14, R48, SDG 11 - Sustainable Cities and Communities, R13, Second-best road pricing, revenue recycling, monocentric city, monocentric city, H76, J20, jel: jel:J20, jel: jel:H23, jel: jel:H76, jel: jel:R41, jel: jel:R14, jel: jel:R13, jel: jel:R48
revenue recycling, R41, ddc:330, H23, Second-best road pricing, R14, R48, SDG 11 - Sustainable Cities and Communities, R13, Second-best road pricing, revenue recycling, monocentric city, monocentric city, H76, J20, jel: jel:J20, jel: jel:H23, jel: jel:H76, jel: jel:R41, jel: jel:R14, jel: jel:R13, jel: jel:R48
| selected citations These citations are derived from selected sources. This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | 39 | |
| popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network. | Top 10% | |
| influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | Top 10% | |
| impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network. | Average |
