Russo, Antonio (2012) Voting on Road Congestion Policy. TSE Working Paper, n. 12-310

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Abstract

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.