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Pricing of Transport Networks, Redistribution, and Optimal Taxation
Author(s) -
RUSSO ANTONIO
Publication year - 2015
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12103
Subject(s) - unobservable , redistribution (election) , economics , microeconomics , schedule , public transport , work (physics) , public economics , econometrics , transport engineering , management , politics , political science , law , engineering , mechanical engineering
The author studies optimal pricing of roads and public transport in the presence of nonlinear income taxation. Individuals are heterogeneous in unobservable earning ability. Optimal transport tariffs depend on time costs of travel and work schedule adjustments (days and hours worked per day) as a response to commuting costs. The author finds that discounts for low‐income individuals are optimal only if the time cost of a trip is small enough. Lower travel time costs facilitate screening; therefore, redistribution provides an additional motive for congestion pricing. Finally, the study investigates the desirability of means‐testing of transport tariffs.