Road pricing is not always green

Authors

  • Mogens Fosgerau Technical University of Denmark, Institute for Transport Studies
  • Thomas C. Jensen Technical University of Denmark

DOI:

https://doi.org/10.5278/ojs.td.v17i1.5522

Keywords:

road pricing, congestion, demand, cliamte change

Abstract

This paper analyses a tax reform, explicitly conceived by policy makers to be climate-friendly, that partly replaces a high vehicle registration tax by road user charging and allows for differentiation of the remaining registration tax by fuel efficiency. A tight microeconomic framework is proposed to analyze such a reform. For the case of Denmark, the analysis shows that the reform is likely to yield a significant and robust welfare gain. However, it seems not unlikely that CO2 emissions may increase as a result of the reform.

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Published

31-12-2010