The European Road Pricing Game: How to Enforce Optimal Pricing in High-Transit Countries Under Asymmetric Information

33 Pages Posted: 28 Sep 2011 Last revised: 24 Oct 2011

See all articles by Saskia Van Der Loo

Saskia Van Der Loo

Katholieke Universiteit Leuven. KUL. Faculty of Business and Economics

Stef Proost

KU Leuven - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 2011

Abstract

A federal government tries to force local governments to implement welfare optimal tolling and investment. Welfare optimal tolling requires charging for marginal external costs. Local governments have an incentive to charge more than the marginal social cost whenever there is transit traffic. We analyze the pricing and investment issue in an asymmetric information setting where the local governments have better information than the federal government. The case of air pollution and of congestion are discussed.

Keywords: road pricing, federalism, asymmetric information, implementation congestion pricing

Suggested Citation

Van Der Loo, Saskia and Proost, Stef V., The European Road Pricing Game: How to Enforce Optimal Pricing in High-Transit Countries Under Asymmetric Information (September 2011). Available at SSRN: https://ssrn.com/abstract=1934137 or http://dx.doi.org/10.2139/ssrn.1934137

Saskia Van Der Loo (Contact Author)

Katholieke Universiteit Leuven. KUL. Faculty of Business and Economics ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Stef V. Proost

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
016 32 66 35 (Phone)
016 32 67 96 (Fax)

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