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. This description is adapted from Wikipedia contributors under CC BY-SA 4.0; changes were made. https://creativecommons.org/licenses/by-sa/4.0/
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 FAQs
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.
Connections
Sources
1. Congestion Pricing (Wikipedia)
Wikipedia (Wikimedia Foundation)Description
charge a price in order to allocate a scarce resource to its most valuable use, as evidenced by users' willingness to pay for the resource
Lead
Congestion pricing or congestion charges is a system of surcharging users of public goods
- In Category: Concepts
- Part Of: Road Transport
- Part Of: Transportation Demand Management
In Group: Road Congestion Concepts, Lead sentence
Congestion pricing or congestion charges is a system of charging users of public goods that are subject to congestion through excess demand, such as through higher peak charges for use of bus services, electricity, metros, railways, telephones, and road pricing to reduce traffic congestion; airlines and shipping companies may be
View the Source Dissenting Readings (1 dissenting reading)
Core Concern
Robert Cervero, professor of City and Regional Planning at the University of California, Berkeley, summarizes the standing objection to congestion pricing as a practical and political one as much as an economic one: few people beyond transportation economists and environmentalists favor materially higher peak-period charges, middle-class motorists already feel over-taxed by fuel duty and registration fees, and critics call road pricing elitist, pricing the poor off the roads so wealthier drivers can move freely. He treats this as the main reason true social-cost pricing has remained a theoretical ideal rather than the norm in practice.
A dissenting reading, from Robert CerveroCongestion Pricing (Wikipedia), Wikipedia (Wikimedia Foundation)
Reader Challenges (0)
No disputes yet. Spotted an error or a better source? Open the first one.
Sign in to dispute this or suggest a correction.