The London Congestion Charge

By the 1990s, the average speed of trips across London was below that at the beginning of the twentieth century—before the car was introduced—and by the end of that decade, public concern over levels of traffic congestion was high. In early 2003, London imposed a congestion charge—a daily charge for driving or parking a vehicle on public roads within central London between the hours of 7:00 a.m. and 6:30 p.m. on workdays. Traffic congestion has declined substantially, and the program is largely popular. This article describes the origins of the London congestion charge, how it overcame practical and theoretical difficulties, and what effects it has had. The introduction of the London congestion charge is, in important respects, a triumph of economics. It represents a high-profile public and political recognition of congestion as a distorting externality and of road pricing as an appropriate policy response.