Can Road Charges Alleviate Congestion?

50 Pages Posted: 19 Oct 2017  

Leslie A. Martin

The University of Melbourne - Department of Economics

Sam Thornton

The University of Melbourne - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 19, 2017

Abstract

We describe the results of a large road use pricing experiment that installed GPS responders in 1400 vehicles and implemented usage, time-of-day, and cordon charges via a system of virtual accounts. Using six-second location data collected over an eight to ten month period, we find a mean price elasticity of -0.13 to per kilometer charges, which is consistent with the literature on short-term demand response to fuel price increases. However constant charges do not reduce congestion; they lead primarily to reductions in high-speed driving and off-peak road use. We show that charges targeted at peak times or central areas are more successful in relieving congestion. We also document the role of public transit, providing evidence that time-of-day and cordon charges push out the distance between home and station at which households opt to walk to public transport. We see no increase in driving to commuter rail and no reduction in commutes to work. We conclude by showing that low-income drivers are the most responsive to these road use charges and benefit the most from replacing existing transport taxes with fees that reflect each driver's contribution to road use externalities.

Keywords: congestion pricing, urban transportation, distributional concerns, public transport

JEL Classification: H22, H23, Q04, Q05, Q31, R02, R04

Suggested Citation

Martin, Leslie A. and Thornton, Sam, Can Road Charges Alleviate Congestion? (October 19, 2017). Available at SSRN: https://ssrn.com/abstract=3055522 or http://dx.doi.org/10.2139/ssrn.3055522

Leslie A. Martin (Contact Author)

The University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

HOME PAGE: http://lesliemartin.org

Samuel Thornton

The University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

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