Scandinavian Working Papers in Economics

Working Papers,
Swedish National Road & Transport Research Institute (VTI)

No 2024:2: Policies for internalizing externalities from car transport in two Swedish cities

Roger Pyddoke () and Joar Lind ()
Additional contact information
Roger Pyddoke: Swedish National Road and Transport Research Institute (VTI), Postal: VTI, Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Joar Lind: Swedish National Road and Transport Research Institute (VTI), Postal: VTI, Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden

Abstract: Cities around the world contemplate how the transports of the city can be greened by shifting passenger transport demand from private car to more sustainable modes. Car users in cities frequently do not fully pay for the externalities (for example congestion, delays, accidents, noise, and air pollution) they cause other car users and citizens. This paper models and compares the effects of welfare optimized parking charges, congestion taxes, and kilometre taxes in Malmö and Uppsala in Sweden, internalization of externalities, welfare and shift of demand from car use to other modes. The results indicate that there is a significant potential for improvement in social welfare and for shifting mode from car to other modes by pricing car use externalities by all three instruments. The increased costs per trip imposed on car users by the instrument vary by a factor two from about EUR 1 to about EUR 2.

Keywords: parking charge; congestion tax; kilometre tax; Sweden; welfare; optimization; mode shift

JEL-codes: R41; R48

Language: English

29 pages, February 28, 2024

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