Transcript Chapter 11 Autos and Highways

Chapter 11 Autos and Highways
Urban Transportation
Three basic problems caused by autos
• Congestion
– What is the optimum level of congestion
• Pollution
– Alternative control policies:
pollution taxes & gas taxes
• Highway accidents
– Can government do anything
Modal Choice of Transportation
What is the Optimal Level of Congestion
• Distance of highway is 10 miles
• Monetary travel costs are 20¢ per mile
• Opportunity cost is 10¢ per minute
• Demand for travel: The marginal willingness
to pay of the marginal traveler
Table 11-1 O’Sullivan
Volume
Trip
Time
ΔT per
Driver
ΔTotal
Travel
Time
Externa Private
l Trip
Trip
Cost
Cost
Social
Trip
Cost
Marginal
Benefit
200
12.00
0.000
0.00
0.00
3.20
3.20
31.10
400
12.00
0.000
0.00
0.00
3.20
3.20
27.44
600
12.80
0.007
4.20
0.42
3.28
3.70
23.78
800
14.80
0.013
10.40
1.04
3.48
4.52
20.12
1000
18.00
0.019
19.00
1.90
3.80
5.70
16.46
1200
22.40
0.025
30.00
3.00
4.24
7.24
12.80
1400
28.00
0.031
43.40
4.34
4.80
9.14
9.14
1600
34.80
0.037
59.20
5.92
5.48
11.40
5.48
1800
42.80
0.043
77.40
7.74
6.28
14.02
1.82
2000
52.00
0.049
98.00
9.80
7.20
17.00
Congestion Tax
• A tax that equals the
difference between
social trip cost and the
private trip cost, will
make both costs equal
• This tax will reduce the
number of trips to the
optimum.
Benefits and Costs from a Congestion tax
• People who continue using the highway pay
the tax, but have lower travel costs
• People who stop using the highway do not
pay the tax, but forgo the benefits from using
the highway
• Generates revenue
Efficient Congestion Cast
• Taxes may vary
between peak
and off-peak
travel
Responses to Congestion Taxes
•
•
•
•
Modal Substitution
Time of Travel
Travel Route
Location Choices
Alternative to Congestion Taxes
• Gasoline Tax
– Increases costs of all automobile travel
– Does not encourage changes in time of travel
• Parking Tax
– Charge different fares parking fares for cars that
arrive/leave at different times
– Only affects peak period drivers
– Does not change travel route or location choices
– Only affects cars who park in congested areas
• Congestion Zone Taxes
What happens if we increase capacity?
$
Private Cost Narrow Highway
Private Cost Wide Highway
Demand
Vo Vw
Traffic Volume
Subsidies for Transit
a) Free Market (B,R) b) Subsidy Transit (S,C)
d) Congestion Tax (A,Q);
$
Social Trip Cost
$
Private Trip Cost
R
A
B
C
D
D Sub
Q
Marginal Social Cost
Private Cost under Subsidy
S
D
A
D Tax
T
Transit Subsidy (Cont)
• A subsidy on transit is less efficient than a
congestion tax, because it under prices transit
raising ridership above its optimum level
Highway Pricing and Traffic Volume
in the Long Run
• Government can design a policy with the
optimal road volume and the optimal road
width?
– Derive Average Total Cost Curves
– Derive Long Run Average and Marginal Cost
Curves (CRS)
– Pick the optimum traffic volume and road width
– Pick the congestion tax that generates the optimal
volume
Who pays for the expanded capacity?
Average Total Cost Curves
• Define ATC=ARC+PTC
• There will be an ATC for each size of
freeway
• U-Shaped because of 2 effects:
– Cost Effect
– Congestion Effect
Long-Run ATC Curve
• For a given volume of traffic, what is the
most efficient average total cost?
• LRAC envelops the minimum of ATC curves
• Long Run Marginal Cost: Long Run Social
Cost of an additional driver
Optimum Volume and Road Width
• MC=MB
• Congestion Tax encourages the drivers to
drive a volume of V**
• Recall:
– ARC=ATC-PTC
– Congestion Tax=STC-PTC
Congestion Tax covers the price of the road!
• Congestion Tax=Average Road Cost iff Average
Total Cost = Social Total Cost
• Social Trip Cost is the short run marginal
cost of one additional driver
• Revenue Sends a signal:
– Increase highway size if revenue>ARC
Autos and Air Pollution
• Autos and trucks generate air pollution
• Externality Problem:
Drivers base their decisions to drive or not on
the marginal private cost of driving which is
less than the marginal social cost of driving
Congestion Tax and the
Monocentric City?
$
R1
Ro
u
Pollution Externalities
• Pollution externalities causes:
– People drive cars that generate a lot of pollution
– People drive too many miles
• Solutions: People should pay for the
pollution they generate
• How to estimate the cost?
What can be done?
• One time pollution tax on automobiles that
equals the pollution the car generates in
lifetime
• Use a gasoline tax
– Affects all cars, not only the ones who pollute
– Reduces pollution be reducing miles driven, not
by encouraging people to have cleaner cars
Auto Safety
• Auto safety leading cause pf death among 1-24
years old population
• 42,000 deaths
• Safety Regulations: Air bags, seatbelts, etc…
– Theory of risk compensation
• Optimum Speed
E (CrashCost)
 Value _ of _ Tim e
Speed
The value of a life
• Ashenfelter and Greenstone (2002)
• Use state variations on speed limits to valuate
a life. In 1987 21 states moved rural interstate
speed limit from 55 mph to 65 mph
• Increase of speeds of 3.5% associated with
35% increase in fatality rates
• 125,000 hours saved per lost life
• Each fatality is valuated in 1.54 million dollars