Abstract
This paper quantifies behavioural responses to changes in the jurisdiction of a congestion charge, with a successive focus on (i) an extension and (ii) a reduction in the size of the charging zone. We exploit the unanticipated nature of both the implementation and removal of London’s Western Expansion Zone (WEZ) as quasi-natural experiments to test whether individual responses to policies are asymmetric. We use the UK Department of Transport Annual Average Daily Flow (AADF) data, which records traffic flows for seven transport modes (including cars, buses, bicycles, heavy and light goods vehicles). Using a difference-in-differences approach, we find that the introduction of the WEZ led to a 4.9% decline in road traffic flows in the new congestion charge area. These results are robust to different model specifications. HGVs traffic did not significantly change post-WEZ, which indicates that their road demand is price inelastic. The removal of the WEZ led to no significant variations in traffic. This result indicates asymmetry in behaviour with persistent changes in post-intervention traffic demand levels.
Highlights
Congestion-related economic and welfare costs are substantial and have gone up in recent decades
Data Availability Statement: The data underlying the results presented in the study are available from the Consumer Data Research Centre and the UK Department for Transport
Our results show that the introduction of the Western Expansion Zone (WEZ) led to a 4.9% decline in road traffic flows for all motor vehicles in the new congestion charge area
Summary
Congestion-related economic and welfare costs are substantial and have gone up in recent decades. In addition to causing economic losses through lost times, congestion can damage the environment and human health via increased vehicle emissions [2, 3]. Negative effects associated with congestion have prompted governments to intervene by either increasing capacity or implementing demand management tools such as taxes, driving restrictions and subsidies. These policies can result in increased traffic volumes through induced demand, which limits their efficiency [6, 7]
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