Voting on Road Congestion Policy

Résumé

We study the political economy of urban traffic policy. We consider a city and its suburbs. The city decides, by majority voting, on a parking charge in the Central Business District (CBD) and restrictions on road space dedicated to cars. City and suburbs vote on road pricing in the CBD. Results include the following. When the majority of city voters prefers cars to public transport sufficiently more than the average voter, car charges and space restrictions are smaller than optimal. If the suburbs' voters have stronger preferences for cars than the city's, road pricing has the lowest political support among the instruments we consider. Tax exporting and imperfect government coordination may inflate total charges. This is welfare enhancing if it compensates for voters' opposition to car restraining policies. Earmarking charge revenues for public transport is welfare enhancing only if they are topped up by extra funds from a national government.