Welfare effects of Stockholm congestion charges using dynamic network assignment

Welfare effects of Stockholm congestion charges using dynamic network assignment

According to the standard textbook analysis, drivers as a group will be worse off with congestion charging if not compensated by revenues. This result is confirmed by an analysis of the Stockholm congestion charging scheme using a static model with homogenous users. However, both this static model and the standard textbook analysis omit three important factors: taste heterogeneity, effects of charges on the larger network arising from less blocking back of upstream links and behavioural adjustments in the temporal dimensions. Taking account of these factors, using a dynamic model with heterogeneous users in a large-scale network, we find that drivers as a group benefit directly from the charging scheme in Stockholm. This paper investigates the importance of the three factors omitted in the standard textbook and the static model analysis in the Stockholm case, finding that all three add significantly to the benefit of the charges.

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