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Road Pricing with Green Vehicle Exemptions: Theory and Evidence

Author

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

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

  • Nilsson, J Peter & Tarduno, Matthew & Tebbe, Sebastian, 2024. "Road Pricing with Green Vehicle Exemptions: Theory and Evidence," CEPR Discussion Papers 18955, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18955
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    More about this item

    JEL classification:

    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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