Road Pricing for Congestion Management: The Transition from Theory to Policy

Traffic congestion is a classic externality, especially pervasive in urban areas. The theoretical and empirical relationships governing it have been thoroughly studied. As a result, there is a consensus among urban economists, and a growing number of other analysts, that the best policy to deal with it would be some form of congestion pricing. Such a policy involves charging a substantial fee for operating a motor vehicle at times and places subject to peak demands. The intention is to alter people’s travel behavior enough to reduce congestion.