NOT OPTIMAL, BUT EFFECTIVE: THE MULTI-MODE TICKET FOR REDUCING URBAN TRAFFIC CONGESTION IN MEDIUM-SIZED TOWNS*

Economists have long been aware of congestion ex-ternalities and proposed very sophisticated road pricing schemes to internalize the external costs of driving in urban regions. An optimal solution could be achieved by levying road user fees that exactly equal the additional costs that each car driver im-poses on others. Since these costs depend among many other things, on location, time and type of car, an optimal policy requires, in principle, individual, time-dependent and locally differentiated road user charges (see Lindsey and Verhoef 2000 for a recent survey). Apart from Singapore, where such a differ-entiating scheme has been introduced and some far-reaching plans for Hong Kong that have been shelved yet again, not much further action has bee