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The London Congestion Charge

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  • Jonathan Leape

Abstract

By the 1990s, the average speed of trips across London was below that at the beginning of the twentieth century -- before the car was introduced -- and by the end of that decade, public concern over levels of traffic congestion was high. In early 2003, London imposed a congestion charge -- a daily charge for driving or parking a vehicle on public roads within central London between the hours of 7:00 a.m. and 6:30 p.m. on workdays. Traffic congestion has declined substantially, and the program is largely popular. This article describes the origins of the London congestion charge, how it overcame practical and theoretical difficulties, and what effects it has had. The introduction of the London congestion charge is, in important respects, a triumph of economics. It represents a high-profile public and political recognition of congestion as a distorting externality and of road pricing as an appropriate policy response.

Suggested Citation

  • Jonathan Leape, 2006. "The London Congestion Charge," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 157-176, Fall.
  • Handle: RePEc:aea:jecper:v:20:y:2006:i:4:p:157-176
    Note: DOI: 10.1257/jep.20.4.157
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.20.4.157
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    References listed on IDEAS

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    1. David M. Newbery & Georgina Santos, 1999. "Road taxes, road user charges and earmarking," Fiscal Studies, Institute for Fiscal Studies, vol. 20(2), pages 103-132, June.
    2. Parry, Ian W. H. & Bento, Antonio, 2002. "Estimating the Welfare Effect of Congestion Taxes: The Critical Importance of Other Distortions within the Transport System," Journal of Urban Economics, Elsevier, vol. 51(2), pages 339-365, March.
    3. Small, Kenneth A. & Yan, Jia, 2001. "The Value of "Value Pricing" of Roads: Second-Best Pricing and Product Differentiation," Journal of Urban Economics, Elsevier, vol. 49(2), pages 310-336, March.
    4. Small, Kenneth A., 1992. "Using the Revenues from Congestion Pricing," University of California Transportation Center, Working Papers qt32p9m3mm, University of California Transportation Center.
    5. Georgina Santos, 2008. "The London Congestion Charging Scheme, 2003–2006," Chapters,in: Road Congestion Pricing in Europe, chapter 8 Edward Elgar Publishing.
    6. Verhoef, Erik T., 2002. "Second-best congestion pricing in general networks. Heuristic algorithms for finding second-best optimal toll levels and toll points," Transportation Research Part B: Methodological, Elsevier, vol. 36(8), pages 707-729, September.
    7. Newbery, David M, 1990. "Pricing and Congestion: Economic Principles Relevant to Pricing Roads," Oxford Review of Economic Policy, Oxford University Press, vol. 6(2), pages 22-38, Summer.
    8. Erik T. Verhoef & Kenneth A. Small, 2004. "Product Differentiation on Roads," Journal of Transport Economics and Policy, University of Bath, vol. 38(1), pages 127-156, January.
    9. Georgina Santos & David Newbery, 2001. "Urban Congestion Charging: Theory, Practice and Environmental Consequences," CESifo Working Paper Series 568, CESifo Group Munich.
    10. May, A. D. & Liu, R. & Shepherd, S. P. & Sumalee, A., 2002. "The impact of cordon design on the performance of road pricing schemes," Transport Policy, Elsevier, vol. 9(3), pages 209-220, July.
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