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The effects of road pricing on driver behavior and air pollution

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  • Gibson, Matthew
  • Carnovale, Maria

Abstract

Exploiting the natural experiment created by an unanticipated court injunction, we evaluate driver responses to road pricing. We find evidence of intertemporal substitution toward unpriced times and spatial substitution toward unpriced roads. The effect on traffic volume varies with public transit availability. Net of these responses, Milan’s pricing policy reduces air pollution substantially, generating large welfare gains. In addition, we use long-run policy changes to estimate price elasticities.

Suggested Citation

  • Gibson, Matthew & Carnovale, Maria, 2015. "The effects of road pricing on driver behavior and air pollution," Journal of Urban Economics, Elsevier, vol. 89(C), pages 62-73.
    • Handle: RePEc:eee:juecon:v:89:y:2015:i:c:p:62-73
    DOI: 10.1016/j.jue.2015.06.005
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    More about this item

    Keywords

    Road pricing; Traffic policy; Air pollution;
    All these keywords.

    JEL classification:

    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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