Scandinavian Working Papers in Economics

Research Programme in Transport Economics,
Research Programme in Transport Economics

No 2019:2: Optimal pricing of car use in a small city: a case study of Uppsala

Disa Asplund () and Roger Pyddoke ()
Additional contact information
Disa Asplund: Research Programme in Transport Economics, Postal: Forskningsprogrammet TRANSPORTEKONOMI, Att: VTI, Box 55685, 102 15 STOCKHOLM
Roger Pyddoke: Research Programme in Transport Economics, Postal: Forskningsprogrammet TRANSPORTEKONOMI, Att: VTI, Box 55685, 102 15 STOCKHOLM

Abstract: Studies of cities which successfully have shifted mode choice from car to more sustainable modes, suggest that coordinated packages of mutually reinforcing policy instruments are needed. Congestion charges and parking fees can be important parts of such packages. This paper aims to examine the introduction of welfare optimal congestion charges and parking fees in a model calibrated to Uppsala, a small city in Sweden. The results suggest that welfare optimal congestion charges in Uppsala are as high as EUR 3.0 in the peak hours and EUR 1.5 in the off-peak. In a rough cost-benefit analysis it is shown that the introduction of congestion charges in Uppsala are welfare improving if operating costs of congestion charges are proportional to city population size (compared to Gothenburg). The model can be used to assess when it is worthwhile to introduce congestion pricing.

Keywords: Congestion charges; Parking; Pricing; Demand; Optimization; Urban; Welfare

JEL-codes: R10; R41; R48

43 pages, November 21, 2019

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