Project Director

Pratt, Leila

Department Examiner

Hutchinson, Bruce; Guilfoyle, James; Giles, David


Dept. of Economics


University of Tennessee at Chattanooga

Place of Publication

Chattanooga (Tenn.)


The practice of congestion pricing, also called road pricing, is by no means a new innovation. It has roots as far back as the American Revolution, but in the modern world filled with hundreds of millions of cars it is a possible answer to gridlock, a potential source of revenue, and an environmentally conscious policy. The question remains though, is congestion pricing effective and, assuming that it is, is it a benefit to a community or a tax upon the poorer members of society? It has been implemented across the world in many forms and with varying degrees of success, ranging from London to Singapore, but its effects on business and the environment are still debated. This proposed DHON will examine the economic, social, and environmental implications of congestion pricing and whether or not it is an effective and useful policy. The first portion will deal briefly with the history of road pricing throughout the world and provide the necessary background to the examination of this topic. In the second section of this paper I will review the economic theory of congestion pricing and how these theories can be implemented in practical terms. Having given the necessary background I will present three case studies of cities where this policy has been attempted. The first case study will focus on Singapore which has had congestion pricing since 1975 and, in 1998, was the first city to successfully implement Electronic Road Pricing. In particular this case study will examine the economic effects on local businesses, tourism, and the population. It will also consider the factors that led Singapore to adopt this policy to begin with, the implementation of both the Singapore Area Licensing Scheme and the more recent Electronic Road Pricing system, and the statistical data on the program’s success so far. The next case study will examine the London Congestion Charge, which was enacted in 2003 and is one of the largest examples of road pricing in the western world. The environmental effects of the policy will be considered (particularly its effects on emissions such as nitrogen dioxide, carbon dioxide, and particulate matter), whether the charges imposed were enough to lower pollution, and what effect that had on the local economy. In addition, what was the effect, given the potential influx of people taking advantage of it, on public transportation? Finally this thesis will consider a case where congestion pricing was attempted, but ultimately failed in New York City between 2006 and 2008. Coming at the problem from the opposite direction this thesis will address the potential issues of road pricing that came to the fore during the legislative battle to make New York City’s proposal a reality. The question of the essential fairness of the policy will be a center point of this study. By enacting road pricing are we only shifting the burden onto the poor by imposing a cost, in either time lost or money spent, on any commuters? Alternatively, if the funds gained from the toll imposed are distributed in a way that enhances public transportation is the potential cost mitigated or erased? The conclusion shall draw from all of the above examples, as well as smaller scale projects like Milan or applications of the policy to differing mediums such as the case of the Panama Canal, in order to answer the original thesis question: Is this an effective and desirable policy? This DHON thesis will make the argument that, yes, congestion pricing is a tool that is worth the potential costs it might entail or the difficulties associated with it. Further, that it is also an environmentally useful way to reduce emissions and curb gridlock. Finally, that the economic impact of congestion pricing is not cause for major concern.


Dr. Leila Pratt Dr. Bruce Hutchinson Dr. James Guilfoyle Dr. David Giles


B. S.; An honors thesis submitted to the faculty of the University of Tennessee at Chattanooga in partial fulfillment of the requirements of the degree of Bachelor of Science.




Congestion pricing; Traffic congestion -- Management -- United States


Congestion Pricing; Road Pricing; Vickrey; ERP; London Congestion Charge; Ecopass



Document Type



44 leaves







Date Available


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Economics Commons