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The Effects of Road Pricing on Driver Behavior and Air Pollution

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Exploiting the natural experiment created by an unanticipated court injunction, we evaluate driver responses to road pricing. We find evidence of intertemporal substitution toward unpriced times and spatial substitution toward unpriced roads. The effect on traffic volume varies with public transit availability. Net of these responses, Milan's pricing policy reduces air pollution substantially, generating large welfare gains. In addition, we use long-run policy changes to estimate price elasticities.

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  • Matthew Gibson & Maria Carnovale, 2015. "The Effects of Road Pricing on Driver Behavior and Air Pollution," Department of Economics Working Papers 2015-16, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2015-16
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    More about this item

    Keywords

    road pricing; traffic policy; air pollution;
    All these keywords.

    JEL classification:

    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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