Editing Congestion pricing (section)

{{Short description|System of surcharging users of public goods}}
{{About|traffic congestion pricing|other types of congestion pricing|Dynamic pricing|and|Variable pricing|the broader concept of direct charges paid by road users|Road pricing}}
[[File:027 ERP gantry.jpg|thumb|250px|[[Electronic Road Pricing]] gantry in Singapore, the first place in the world to implement an urban cordon area congestion pricing scheme]]
{{Economics sidebar}}
{{Taxation}}

'''Congestion pricing''' or '''congestion charges''' is a system of [[Surcharge (payment systems)|surcharging]] users of [[Public good (economics)|public good]]s that are subject to congestion through excess [[Demand (economics)|demand]], such as through higher peak charges for use of [[Public transport bus service|bus services]], [[Electric utility|electricity]], [[rapid transit|metros]], [[railway]]s, [[telephone]]s, and [[road pricing]] to reduce [[traffic congestion]]; [[airline]]s and [[shipping]] companies may be charged higher fees for slots at [[airports]] and through [[canal]]s at busy times. This [[pricing]] strategy regulates demand, making it possible to manage congestion without increasing [[Supply (economics)|supply]].

According to the economic theory behind congestion pricing, the objective of this policy is to use the [[Free price system|price mechanism]] to cover the social cost of an activity where users otherwise do not pay for the [[externalities|negative externalities]] they create (such as driving in a congested area during peak demand). By setting a price on an over-consumed product, congestion pricing encourages the redistribution of the demand in space or in time, leading to more [[Economic efficiency|efficient]] outcomes.

[[Singapore]] was the first country to introduce congestion pricing on its urban roads in [[Singapore Area Licensing Scheme|1975]], and was refined in [[Electronic Road Pricing (Singapore)|1998]]. Since then, it has been implemented in cities including [[London congestion charge|London]], [[Stockholm congestion tax|Stockholm]], [[Ecopass|Milan]], [[Gothenburg congestion tax|Gothenburg]], and in the [[central business district]] of [[Manhattan]] in [[Congestion pricing in New York City|New York City]]. It was also considered in [[Washington, D.C.]] and [[San Francisco congestion pricing|San Francisco]] prior to the [[COVID-19 pandemic]].<ref name=NYCongestionPricing>{{cite news|url=https://www.nytimes.com/2025/01/04/nyregion/congestion-pricing-nyc.html|title=Welcome to the Congestion Zone: New York Toll Program Is Set to Begin|author=Winnie Hu and Ana Ley|newspaper=[[The New York Times]]|date=January 4, 2025|access-date=January 4, 2025}}</ref> Greater awareness of the harms of pollution and emissions of [[greenhouse gas]]es in the context of [[climate change]] has recently created greater interest in congestion pricing.

Implementation of congestion pricing has reduced [[traffic congestion]] in urban areas,<ref>{{Cite web|title=What is Congestion Pricing? - Congestion Pricing - FHWA Office of Operations|url=https://ops.fhwa.dot.gov/congestionpricing/cp_what_is.htm|access-date=2021-12-18|website=[[Federal Highway Administration|Federal Highway Administration (FHWA)]]}}</ref> reduced pollution,<ref name=":0" /> reduced asthma,<ref name=":1" /> and increased home values,<ref>{{Cite journal|last=Tang|first=Cheng Keat|date=2021-01-01|title=The Cost of Traffic: Evidence from the London Congestion Charge|url=https://www.sciencedirect.com/science/article/pii/S0094119020300735|journal=Journal of Urban Economics|language=en|volume=121|pages=103302|doi=10.1016/j.jue.2020.103302|hdl=10356/146475 |s2cid=209687332 |issn=0094-1190|hdl-access=free}}</ref> but has also sparked criticism and political discontent.<ref>{{Citation | last = Button | first = Kenneth J. | year = 1993 | title = Transport Economics 2nd Edition| page = 154-155| publisher = Edward Elgar Publishing Ltd, England| id = ISBN 978-1852785239 }}</ref><ref>{{Citation| last = Small, Kenneth A.; Verhoef, Erik T. | title = The Economics of Urban Transportation | year = 2007
| publisher = Routledge, New York| page = 120-121| id = ISBN 978-0-415-28515-5}}</ref>

There is a consensus among economists that congestion pricing in crowded transportation networks, and subsequent use of the proceeds to lower other taxes, makes citizens on average better off.<ref>{{Cite web |title=Congestion Pricing |url=https://www.kentclarkcenter.org/surveys/congestion-pricing/ |access-date=2023-12-09 |website=Clark Center Forum |language=en-US}}</ref> Economists disagree over how to set tolls, how to cover common costs, what to do with any excess revenues, whether and how "losers" from tolling previously free roads should be compensated, and whether to privatize highways.<ref>{{cite journal|journal=[[Econ Journal Watch]]|volume=3|issue=2|pages=292–379|author=Lindsey, Robin|title=Do Economists Reach a Conclusion on Road Pricing? The Intellectual History of an Idea|date=May 2006|url=http://econjwatch.org/issues/volume-3-number-2-may-2006|format=PDF|access-date=2008-12-09}}</ref>