Concepts
Congestion Pricing
Also Known As Congestion Charges
Road Concept
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Congestion pricing is the use of a price mechanism, rather than added road capacity, to manage excess demand for a scarce public good such as urban road space, so the price charged reflects the social cost a driver imposes on other users at that time. Singapore was the first country to introduce congestion pricing on its urban roads, launching the Area Licensing Scheme in 1975 and later replacing it with an electronic system in 1998. London introduced its own congestion charge in 2003, levying a daily fee on vehicles driving within a central zone. The underlying rationale is that a driver who does not pay for the congestion, delay and pollution they impose on others is not facing the true marginal cost of their trip, and a price signal during peak periods allocates scarce road space to those who value it most.
Facts
Core ConcernUsing price rather than added capacity to manage peak time road congestion, so drivers who value a trip most highly pay to use scarce road space during the periods of highest demand, while the revenue can be reinvested in transport. 1 Cross-Tradition Connections
Sources
Frequently Asked Questions
Where was congestion pricing first used on urban roads?
Singapore, with its 1975 Area Licensing Scheme.
Singapore was the first country to introduce congestion pricing on its urban roads, launching the Area Licensing Scheme in 1975 and replacing it with an electronic system in 1998. London later introduced its own congestion charge in 2003.
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