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The Marginal Cost of Traffic Congestion and Road Pricing: Evidence from a Natural Experiment in Beijing

Jun Yang, Avralt-Od Purevjav () and Shanjun Li ()

American Economic Journal: Economic Policy, 2020, vol. 12, issue 1, 418-53

Abstract: Severe traffic congestion is ubiquitous in large urban centers. This paper provides the first causal estimate of the relationship between traffic density and speed and optimal congestion charges using real-time fine-scale traffic data in Beijing. The identification relies on plausibly exogenous variation in traffic density induced by Beijing's driving restriction policy. Optimal congestion charges range from 5 to 39 cents per km depending on time and location. Road pricing would increase traffic speed by 11 percent within the city center and lead to an annual welfare gain of ¥1.5 billion from reduced congestion and revenue of ¥10.5 billion.

JEL-codes: H23 O18 P25 R41 R48 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1257/pol.20170195

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