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Problems With London Congestion Charge

December 19, 2007, 9:43 am

The idea of a congestion charge is a good one.  London, however, is struggling with the implementation.  Apparently, while the number of cars in the congestion zone has gone down, the rush hour congestion has gone up.  Why?  Because the congestion charge does not change by time of day, it is more than high enough to drive out off-hour users, but is not high enough to change the behavior of rush hour drivers.  Basically, they have made the center of London quieter at night.

This is actually not surprising. Economic theory would say that the
demand for travel at rush hour is more inelastic (i.e., less
susceptible to fees) than travel at other times of the day. (If it were
not inelastic, people would be willing to drive in such congestion.) If
fees don't change during the course of the day, they will have the
greatest effect during the hours that are more elastic. A properly
designed fee should temper peak-period demand; a fixed fee instead
tempers off-peak demand.

And, as I can attest from my last visit to London, where I was actually dumb enough to drive a car into town, the way they have implemented the system is not very amenable to time of day pricing. 

Tags: , ,
Category: Economics
  • Steve

    The CC is only operational 7 am - 6 pm, M-F (and excluding public holidays).

    It does work, although it's not manna from heaven. Although the average speed has dropped from the level it was six months after the CC was implemented, it's still higher than it was beforehand!

    The problem is that Ken Livingstone got too greedy, and extended it to the west of the City, bringing in over 90,000 residents that are now elligible for a 90% discount on the charge...

    If he'd left it at the City of London, it would be considerably better still. Or if he eliminated the resident discount. Or if he jacked it up to £15/day...

    Best,

    Steve
    London, W1

  • paul

    Actually the congestion charge stops at around 7pm until early the next morning, so it doesn't actually make it quieter at night. Although your basic point is no affected by this detail.

    But I don't see why they couldn't do time of day pricing. After all, the monitoring is done by cameras all over the city not just at the perimeter, so it could vary by time of day (like it does in Singapore, for instance).

  • Bearster

    There are many important differences between an actual, you-know, free market vs. a government imposing user fees. For example, in a free market, if higher prices don't discourage use then they encourage production of the resource (elevated highways over the roads, anyone?) If the government just charges a fee, it will just allow more welfare...

  • Steve

    If there's no disincentive to use of a very limited commodity (space on London roads in rush hour, for example), then there is every incentive for an individual to use up as much of it as one can, thereby creating a competitive advantage (in this case, perhaps, getting home earlier in a private car) versus those who don't (taking a bus or the underground, for example). But, if everyone takes this "competitive advantage", then traffic for all grinds to a halt!

    Congestion pricing is a means to discourage this from taking place. And, given that roads are part of the collective commons, only the government is able to do this. Building more roads in London cannot happen, so something must happen to allocate this resource equitably.

    Personally, I'd rather see the charge jacked up to a much higher level (£30?), shrunk back to its original size (encompassing the city and west end), and linked to the time of day, but I'm not mayor, eh?

  • Honor

    I was not driving my car at the time I got a penalty charge notice should I pay the fine, My brother was driving and hes gone back home in the PHilipines now I dont know what I should do any suggestions