Optimal Carbon Taxation with Recursive Preferences

Demand for express lanes and value of time saved from traffic congestion

This research uses data from several dynamic toll express lanes in Minnesota to estimate demand for them and how much commuters value the time saved by taking them relative to the general highway. The specifi c tolling algorithm generates 32 price discontinuities corresponding to 32 traffic density cutoffs, which are used to build an original identification strategy through an RDD design. Demand is found to be convex and decreasing for all levels of the toll except very low ones, where it is increasing. The average value of an additional minute of time saved is approximately between $0.50 and $1.