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Is congestion pricing a first-best strategy in transport policy? A critical review of arguments

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  • R H M Emmerink
  • P Nijkamp
  • P Rietveld

Abstract

In this paper, the arguments used in the literature pro and contra congestion pricing are analysed. Although it is a first-best instrument in theory, it is argued that the assumptions needed to arrive at this conclusion oversimplify reality. In practice, congestion pricing is a second-best instrument with some advantages over other second-best instruments, but it will also give rise to numerous problems, as discussed in the paper. These problems will be illustrated with the Dutch attempts to implement an electronic road-pricing system. Some research issues relating to congestion pricing have been overlooked in the past. In the first instance, the behavioural side (motorists' responses) of congestion pricing has not been paid much attention. In general, it is argued that individuals are aiming to maximise utility (or minimise travel time). However, there seems to be an increasing recognition that this assumption does not properly describe reality. Second, the impact of the compensation scheme -- used to compensate drivers who are worse off under congestion pricing -- on the behavioural responses should be analysed more carefully in future work. This scheme might partly reverse the behavioural responses induced. Third, the welfare-generating properties of simple schemes should be looked at in future work. Fourth, given the potential opposition, we conclude that a cordon system, in which the price is dependent on the time of the day, is currently the most attractive option for pursuing a kind of congestion pricing. A cordon system might increase the individual's awareness of the costs of mobility during congested periods and be the first step towards more sophisticated pricing systems.

Suggested Citation

  • R H M Emmerink & P Nijkamp & P Rietveld, 1995. "Is congestion pricing a first-best strategy in transport policy? A critical review of arguments," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 22(5), pages 581-602, September.
  • Handle: RePEc:pio:envirb:v:22:y:1995:i:5:p:581-602
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    Cited by:

    1. Satoshi Fujii & Tommy Gärling & Cecilia Jakobsson & Rong-Chang Jou, 2004. "A cross-country study of fairness and infringement on freedom as determinants of car owners' acceptance of road pricing," Transportation, Springer, vol. 31(3), pages 285-295, August.
    2. Gärling, Tommy & Eek, Daniel & Loukopoulos, Peter & Fujii, Satoshi & Johansson-Stenman, Olof & Kitamura, Ryuichi & Pendyala, Ram & Vilhelmson, Bertil, 2002. "A conceptual analysis of the impact of travel demand management on private car use," Transport Policy, Elsevier, vol. 9(1), pages 59-70, January.
    3. Jakobsson, C. & Fujii, S. & Gärling, T., 2000. "Determinants of private car users' acceptance of road pricing," Transport Policy, Elsevier, vol. 7(2), pages 153-158, April.
    4. Marcucci, Edoardo & Marini, Marco A. & Ticchi, Davide, 2005. "Road pricing as a citizen-candidate game," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 31, pages 28-45.
    5. E.T. Verhoef & P. Nijkamp & P. Rietveld & T.R. Lakshmanan, 1997. "Benefits and Costs of Transport," Tinbergen Institute Discussion Papers 97-084/3, Tinbergen Institute.
    6. Allen, Simon & Gaunt, Martin & Rye, Tom, 2006. "An investigation into the reasons for the rejection of congestion charging by the citizens of Edinburgh," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 32, pages 95-113.
    7. Graham-Rowe, Ella & Skippon, Stephen & Gardner, Benjamin & Abraham, Charles, 2011. "Can we reduce car use and, if so, how? A review of available evidence," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(5), pages 401-418, June.
    8. Thøgersen, John, 2006. "Understanding repetitive travel mode choices in a stable context: A panel study approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(8), pages 621-638, October.
    9. Fan, Wenbo & Jiang, Xinguo & Erdogan, Sevgi & Sun, Yanshuo, 2016. "Modeling and evaluating FAIR highway performance and policy options," Transport Policy, Elsevier, vol. 48(C), pages 156-168.
    10. Hensher, David A. & Li, Zheng, 2013. "Referendum voting in road pricing reform: A review of the evidence," Transport Policy, Elsevier, vol. 25(C), pages 186-197.

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