Credible commitment and congestion pricing

Michael Manville, David King

Research output: Contribution to journalArticlepeer-review

17 Scopus citations

Abstract

Transportation analysts frequently assert that congestion pricing's political obstacles can be overcome through astute use of the toll revenue pricing generates. Such "revenue recycling," however, implies that the collectors of the toll revenue will not be its final recipients, meaning that any revenue recipient must believe that the revenue collector will honor promises to deliver the money. This raises the potential for credible commitment problems. Promises to spend revenue can solve one political problem, because revenue is an easy benefit to understand, but create another one, because revenue is easy to divert. Revenue recycling may therefore not be a promising way to build political support for congestion pricing. We highlight the role commitment problems have played efforts to implement congestion pricing, using examples from around the world and then focusing on California. Because congestion reduction is a more certain benefit than any particular use of the toll revenue, demonstration projects, rather than revenue promises, will be key to pricing's political success.

Original languageEnglish (US)
Pages (from-to)229-249
Number of pages21
JournalTransportation
Volume40
Issue number2
DOIs
StatePublished - Jan 1 2013
Externally publishedYes

Keywords

  • Congestion pricing
  • Credible commitment
  • Political acceptability
  • Revenue recycling
  • Stockholm

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Development
  • Transportation

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