How Should Passenger Travel in Mexico City Be Priced?

49 Pages Posted: 20 Aug 2008 Last revised: 1 Sep 2013

See all articles by Ian W. H. Parry

Ian W. H. Parry

Resources for the Future

Govinda R. Timilsina

World Bank - Development Research Group (DECRG)

Date Written: June 15, 2008

Abstract

This paper uses an analytical-simulation model to examine the optimal extent and welfare effects of pricing reforms for passenger transportation in Mexico City. The model incorporates travel by auto, microbus, public bus, and rail, plus externalities from local and global air pollution, traffic congestion, and road accidents. In our benchmark case, the optimal gasoline tax is $2.72 (29.6 pesos) per gallon, or 16 times the current tax. However, a per-mile toll would reduce traffic congestion, the largest externality, more directly, and we put the optimized auto toll at 20.3 cents per mile. Tolls should also be imposed on microbuses even though the welfare gains are relatively modest, as are those from reforming public transit fares.

Keywords: gasoline taxes, mileage tolls, transit subsidy, pollution, congestion, Mexico City, welfare effects

JEL Classification: R48, H21, H23

Suggested Citation

Parry, Ian W. H. and Timilsina, Govinda R., How Should Passenger Travel in Mexico City Be Priced? (June 15, 2008). RFF Discussion Paper No. 08-17. Available at SSRN: https://ssrn.com/abstract=1238684 or http://dx.doi.org/10.2139/ssrn.1238684

Ian W. H. Parry (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5151 (Phone)
202-939-3460 (Fax)

HOME PAGE: http://www.rff.org/~parry

Govinda R. Timilsina

World Bank - Development Research Group (DECRG) ( email )

1818 H Street NW
MSN3-311
Washington, DC 20433
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
54
Abstract Views
541
rank
384,164
PlumX Metrics