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The city-wide effects of tolling downtown drivers: Evidence from London’s congestion charge

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  • Herzog, Ian

Abstract

This paper studies effects of London’s Congestion Charge on regional traffic, commuting, and economic activity’s spatial distribution. London began tolling drivers into its central business district in 2003 and I find that the policy reduced traffic on untolled roads leading downtown. I build this effect into a quantitative model with heterogeneous skills, endogenous mode choice, and traffic externalities to examine effects on commuters. Simulations suggest that London’s Congestion Charge incentivizes driving to untolled workplaces and gives the region’s commuters positive net benefits. I also find that benefits are progressive because the policy reduces traffic where low-skill commuters live and work.

Suggested Citation

  • Herzog, Ian, 2024. "The city-wide effects of tolling downtown drivers: Evidence from London’s congestion charge," Journal of Urban Economics, Elsevier, vol. 144(C).
    • Handle: RePEc:eee:juecon:v:144:y:2024:i:c:s0094119024000846
    DOI: 10.1016/j.jue.2024.103714
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    Cited by:

    1. Moulin, Léonard & Urbano, Valeria Maria, 2025. "Evaluating the effectiveness of two congestion limitation policies in Milan: Charge increase and vehicle type," Transport Policy, Elsevier, vol. 165(C), pages 17-27.
    2. McLoughlin, Jacob, 2025. "How Does Emissions-Charging Influence House Prices? Evidence From Londons ULEZ," Warwick-Monash Economics Student Papers 86, Warwick Monash Economics Student Papers.
    3. Pol Cosentino, 2026. "Trade, Commuting and City Structure," CESifo Working Paper Series 12557, CESifo.

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    Keywords

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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