Parry, Ian W. H.Timilsina, Govinda R.2012-03-192012-03-192009-10-01https://hdl.handle.net/10986/4263The Mexico City Metropolitan Area has been suffering severely from transportation externalities such as accidents, air pollution, and traffic congestion. This study examines pricing instruments to reduce these externalities using an analytical and numerical model. The study shows that the optimal levels of a gasoline tax and a congestion toll on automobiles could generate social benefits, measured in terms of welfare gain, of US$132 and US$109 per capita, respectively, through the reduction of externalities. The largest component of the welfare gains comes from reduced congestion, followed by local air pollution reduction. The optimal toll and tax would, however, double the cost of driving and could be politically sensitive. Still, more than half of those welfare gains could be obtained through a more modest tax or toll, equivalent to $1 per gallon of gasoline. The welfare gains from reforming the pricing of public transportation are small relative to those from reforming the taxation of automobiles. Although the choice among travel modes depends on specific circumstances, in the absence of road travel pricing that accounts for externalities, there will be potential for higher investment in roads relative to mass transit. Given the rapidly increasing demand for transportation infrastructure in Mexico City, careful efforts should be made to include the full social costs of travel in evaluating alternative infrastructure investments.CC BY 3.0 IGOACCIDENT COSTSACCIDENT EXTERNALITIESACCIDENT RATESACCIDENTSAIRAIR POLLUTIONAIR QUALITY STANDARDSALTERNATIVE TRANSPORTATIONALTERNATIVE TRANSPORTATION MODESALTERNATIVE TRAVELALTERNATIVE TRAVEL MODESAUTO PASSENGERAUTO PRODUCTIONAUTO TRAVELAUTO USEAUTOMOBILEAUTOMOBILE CONGESTIONAUTOMOBILE MILEAGEAUTOMOBILE TRAVELAUTOMOBILE USEAUTOMOBILESAVERAGE TRAVEL TIMEAVERAGE VEHICLE FUEL ECONOMYBAGGAGEBUS FAREBUS MILEAGEBUS PASSBUS PASSENGERBUS SYSTEMBUS TRANSITBUS TRAVELBUSESCAPITAL INVESTMENTSCARCAR OWNERSHIPCARBON CONTENTCARSCLIMATE CHANGECOMMUTER RAILCONGESTION CHARGESCONGESTION COSTSCONGESTION DECLINESCONGESTION EXTERNALITIESCONGESTION PRICINGCONGESTION PROBLEMSCONGESTION TOLLSCOST OF TRAFFICCOST OF TRAVELCOSTS OF ROAD CONGESTIONCOSTS OF TRAFFIC ACCIDENTSCOSTS OF TRAVELCOSTS PER PASSENGER MILEDEMAND FOR TRANSPORTATIONDIESELDIESEL FUELDRIVERSDRIVINGDRIVING COSTSELASTICITYEMISSIONEMISSION RATESEMISSIONSEMISSIONS PER PASSENGERENVIRONMENTAL COSTSEXCISE TAXEXCISE TAX ON GASOLINEEXTERNALITIESFARE ELASTICITIESFARE REDUCTIONSFARE SUBSIDIESFARESFIXED COSTSFUELFUEL COSTSFUEL EXTERNALITIESFUEL PRICEFUEL PRICE ELASTICITIESFUEL PRICESFUEL PRODUCTIONFUEL TAXFUEL TAX INCREASEFUEL TAX INCREASESFUEL TAX PAYMENTSFUEL TAX REVENUESFUEL TAXATIONFUEL TAXESFUEL USEFUELSFUGITIVE EMISSIONSGASOLINEGASOLINE CONSUMPTIONGASOLINE EXCISEGASOLINE PRICEGASOLINE PRICESGASOLINE TAXGASOLINE TAXESGASOLINE USEGLOBAL CLIMATE CHANGEGREENHOUSE GASESHEAVY RAILHEAVY RAIL COMMUTERHIGHWAYIMPLICATIONS FOR TRANSPORTATIONINFRASTRUCTURE INVESTMENTINJURYINTERCITY RAILINVESTMENT IN ROADSLIGHT RAILLOAD FACTORSLOCAL AIR POLLUTIONLOCAL AIR QUALITYLONG-DISTANCELONG-DISTANCE TRAVELMARGINAL EXTERNAL COSTMARGINAL EXTERNAL COSTSMASS TRANSITMILEAGEMILEAGE REDUCTIONSMILES PER CAPITAMODAL SHARESMOTORISTSODOMETERPASSENGER OCCUPANCYPASSENGER TRAVELPASSENGER VEHICLESPASSENGERSPEAK TRAVELPEDESTRIANSPOLLUTION CONCENTRATIONSPOLLUTION COSTSPOLLUTION DAMAGESPOLLUTION REDUCTIONPRICE CHANGESPRICE ELASTICITIESPRICE ELASTICITYPRICE ELASTICITY OF GASOLINEPRICE OF FUELPRICE OF GASOLINEPRIVATE VEHICLEPUBLIC ROADSPUBLIC TRANSITPUBLIC TRANSPORTPUBLIC TRANSPORTATIONRAIL CARRAIL FARESRAIL LINKSRAIL PASSENGERRAIL PROJECTSRAIL SERVICERAIL SYSTEMSRAIL TRAVELRAILWAYRAILWAY SYSTEMRAILWAYSRAPID BUSROADROAD CONGESTIONROAD EXPANSIONROAD SPACEROAD SYSTEMROAD TRAFFICROAD USERSROAD VEHICLESROUTESUBURBAN RAILSUBURBSSUBWAYSUBWAY SYSTEMSUSTAINABLE TRANSPORTTOLLTOLL REVENUESTOLLSTRAFFICTRAFFIC ACCIDENTSTRAFFIC CONGESTIONTRAFFIC DELAYSTRAFFIC ENGINEERINGTRAFFIC SPEEDSTRAINSTRANSIT BUSTRANSIT FARESTRANSIT IMPROVEMENTSTRANSIT MILEAGETRANSIT OPERATORSTRANSIT OPTIONSTRANSIT PATRONAGETRANSIT STOPSTRANSIT SYSTEMTRANSIT TRAVELTRANSIT VEHICLETRANSIT VEHICLE OCCUPANCYTRANSIT VEHICLESTRANSPORTTRANSPORT INFRASTRUCTURETRANSPORT MODESTRANSPORT NETWORKTRANSPORT SECTORTRANSPORT SYSTEMTRANSPORTATIONTRANSPORTATION INFRASTRUCTURETRANSPORTATION POLICIESTRANSPORTATION PRICINGTRANSPORTATION SYSTEMTRANSPORTATION SYSTEMSTRAVEL DEMANDTRAVEL MODETRAVEL MODESTRAVEL SPEEDTRAVEL TIMETRAVEL TIMESTRAVELERSTRIPTROLLEY BUSURBAN PASSENGERURBAN PASSENGER TRAVELURBAN TRANSPORTATIONVEHICLEVEHICLE COLLISIONSVEHICLE CRASHESVEHICLE EMISSIONVEHICLE FLEETVEHICLE FUELVEHICLE FUEL ECONOMYVEHICLE MILEAGEVEHICLE MILESVEHICLE OCCUPANCIESVEHICLE OPERATINGVEHICLE OPERATING COSTSVEHICLE OPERATIONVEHICLE SPEEDVEHICLE TRAVELWorld Bank10.1596/1813-9450-5071