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Road Pricing with Green Vehicle Exemptions: Theory and Evidence

Author

Listed:
  • Peter Nilsson
  • Matthew Tarduno
  • Sebastian Tebbe
  • J. Peter Nilsson

Abstract

We provide a framework for setting congestion charges that reflect emission and congestion externalities and policy responses, such as vehicle ownership, driving, and residential sorting. Using Swedish administrative microdata, we identify these responses by exploiting a temporary exemption for alternative fuel vehicles and variation in individuals’ exposure to congestion charges. We find that commuters respond by adopting exempted alternative fuel vehicles, shifting trips away from fossil fuel toward alternative fuel vehicles, and changing where they live and work. We combine the estimated responses with the framework to recover an optimal congestion charge of €9.46 per crossing in Stockholm.

Suggested Citation

  • Peter Nilsson & Matthew Tarduno & Sebastian Tebbe & J. Peter Nilsson, 2024. "Road Pricing with Green Vehicle Exemptions: Theory and Evidence," CESifo Working Paper Series 11038, CESifo.
    • Handle: RePEc:ces:ceswps:_11038
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11038.pdf
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    References listed on IDEAS

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    1. James Archsmith & Anthony Heyes & Soodeh Saberian, 2018. "Air Quality and Error Quantity: Pollution and Performance in a High-Skilled, Quality-Focused Occupation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(4), pages 827-863.
    2. Janet Currie & Reed Walker, 2011. "Traffic Congestion and Infant Health: Evidence from E-ZPass," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 65-90, January.
    3. Stephen P. Holland & Erin T. Mansur & Nicholas Z. Muller & Andrew J. Yates, 2016. "Are There Environmental Benefits from Driving Electric Vehicles? The Importance of Local Factors," American Economic Review, American Economic Association, vol. 106(12), pages 3700-3729, December.
    4. Michael L Anderson, 2020. "As the Wind Blows: The Effects of Long-Term Exposure to Air Pollution on Mortality," Journal of the European Economic Association, European Economic Association, vol. 18(4), pages 1886-1927.
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