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Pedro Godinho and Joana Dias
''Fuel taxes and tolls in cost-benefit analysis''
( 2011, Vol. 31 No.2 )
When a project either generates or suppresses traffic, fuel taxes and tolls should be considered in the cost-benefit analysis. In this paper we present a simple partial equilibrium model showing that under linear demand, if factor costs are the unit of account and transfer payments are netted out at the outset, then the usual rule of the half works correctly for the incorporation of tolls in the calculus of social costs and benefits, but the incorporation of fuel taxes and other indirect taxes may require a corrective term.
Keywords: Cost-benefit analysis, Transport infrastructures, Indirect taxes
JEL: R4 - Transportation Systems: General
D6 - Welfare Economics: General
Manuscript Received : Mar 03 2011 Manuscript Accepted : May 12 2011

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