Welfare Costs of Urban Traffic through Retail Prices

29 Pages Posted: 21 Mar 2020 Last revised: 9 Mar 2021

See all articles by HAKAN YILMAZKUDAY

HAKAN YILMAZKUDAY

Florida International University (FIU) - Department of Economics

Date Written: March 9, 2021

Abstract

This paper investigates the welfare costs of urban traffic by considering its implications on good-level prices. Using price data for 40 products from 70 cities (covering 47 countries) for multiple years, the estimation results suggest that the elasticity of good-level prices with respect to the time spent in urban traffic is about 0.5. This elasticity is further connected to the welfare of individuals by using the implications of a simple model. The corresponding investigation shows that reducing the time spent in urban traffic by one minute results in a welfare gain of about 1.3% for the average city, with a range between 0.8% and 2.3% across cities.

Keywords: Welfare Costs, City Traffic, Micro Prices

JEL Classification: O18, R41

Suggested Citation

Yilmazkuday, Hakan, Welfare Costs of Urban Traffic through Retail Prices (March 9, 2021). Available at SSRN: https://ssrn.com/abstract=3544457 or http://dx.doi.org/10.2139/ssrn.3544457

Hakan Yilmazkuday (Contact Author)

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://faculty.fiu.edu/~hyilmazk/

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