Abstract
In this paper I analyze the economics of road pricing. In particular I examine possible congestion-reducing consequences of converting the non-toll roads to toll roads. To do that I first estimate the effect of gasoline tax hike on demand for gasoline, and then obtain resulting decrease in the number of cars used. From the estimated results we can derive two important conclusions: First, road pricing can effectively be used to diminish congestion and pollution resulting from the overuse of non-toll roads. Second, current toll fees are not high enough the discourage inefficient driving.
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