Abstract
This paper considers second-best congestion pricing in the monocentric city, with endogenous residential density and endogenous labour supply. A spatial general equilibrium model is developed that allows consideration of the three-way interactions between urban density, traffic congestion and labour supply. Congestion pricing schemes are analysed that are second-best 'by design' (and not because distortions exist elsewhere in the spatial economy), like cordon charging and flat kilometre charges. Both for Cobb-Douglas utility and for CES utility, the analyses suggest that the relative welfare losses from second-best pricing, compared to first-best pricing, are surprisingly small. © 2005 Elsevier Inc. All rights reserved.
Original language | English |
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Pages (from-to) | 367-388 |
Number of pages | 21 |
Journal | Journal of Urban Economics |
Volume | 58 |
Issue number | 3 |
DOIs | |
Publication status | Published - 2005 |