The Marginal Cost of Traffic Congestion and Road Pricing: Evidence from a Natural Experiment in Beijing
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Jun Yang
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Avralt-Od Purevjav
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Shanjun Li
- American Economic Journal: Economic Policy (Forthcoming)
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 Yuan from reduced
congestion and revenue of 10.5 billion Yuan.
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