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Pricing Congestion to Increase Traffic: The Case of Bogotá

Author

Listed:
  • Juan-Pablo Montero
  • Felipe Sepúlveda
  • Leonardo J Basso

Abstract

In September 2021, the city of Bogotá introduced a major market-based reform to its odd–even driving restriction, known as Pico y Placa. Since then, drivers have had the option to pay a daily congestion fee to be exempt from the restriction. We find that while the reform increased traffic, it brought overall benefits. The welfare gains of middle-income individuals, who now use their cars more often, far outweighed the losses experienced by their higher-income counterparts, who now spend more time in traffic. Additionally, we show that these overall benefits could quintuple if Bogotá were to expand the reform into a comprehensive road-pricing scheme, not to mention the extra gains in air quality.

Suggested Citation

  • Juan-Pablo Montero & Felipe Sepúlveda & Leonardo J Basso, 2026. "Pricing Congestion to Increase Traffic: The Case of Bogotá," Journal of the European Economic Association, European Economic Association, vol. 24(2), pages 610-660.
    • Handle: RePEc:oup:jeurec:v:24:y:2026:i:2:p:610-660.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvaf039
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