On Subsidising Auto-Commuting

33 Pages Posted: 14 Oct 2001

See all articles by Edward Calthrop

Edward Calthrop

KU Leuven - Department of Economics

Date Written: September 2001

Abstract

Evidence suggests that a considerable proportion of peak period trips are made for purposes other than commuting to or from work. Given the different degrees of Hicksian complementarity with the labour market, optimal tax theory suggests that, in a second-best world, different trip purposes should be taxed at different rates. This paper explores this issue and argues for a uniform congestion toll (independent of trip-purpose) combined with a subsidy to auto-commuters. A numerical model suggests that while, in the absence of congestion tolls, commuting subsidies are welfare decreasing, an optimal pricing scheme entails auto-commuters receiving a subsidy of nearly 50 percent of the uniform road toll.

JEL Classification: H23, R41

Suggested Citation

Calthrop, Edward, On Subsidising Auto-Commuting (September 2001). Available at SSRN: https://ssrn.com/abstract=284153 or http://dx.doi.org/10.2139/ssrn.284153

Edward Calthrop (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
131
Abstract Views
1,812
Rank
446,318
PlumX Metrics