A note on the distortionary effects of revenue-neutral tolls in a bottleneck congestion game. (October 2016)

• Record Type: Journal Article
• Authors: Janusch, Nicholas
• Is Part Of: Transportation research. Volume 92(2016)
• Page Start: 95
• Page End: 103
• Publication Date: 2016-10
• Subjects: C72 -- R48 -- Q58; Game theory -- Congestion -- Pricing -- Revenue recycling -- Acceptability; Transportation -- Research -- Periodicals; 388.011
• DOI: 10.1016/j.tra.2016.07.007
• Languages: English
• ISSNs: 0965-8564

Abstract

Abstract: This note demonstrates how the redistribution of revenue from a Pigouvian policy can distort incentives and handicap the social objectives of the policy by creating a moral hazard problem. Based on the Levinson (2005) game theory model, I develop a three-player bottleneck congestion game that emulates a repeated prisoner's dilemma and derive efficient tolls. This conceptual game demonstrates the distortionary effects from a revenue-neutral toll policy with lump-sum revenue redistribution and the equity-efficiency tradeoff.