Talk:Congestion pricing

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[edit] Improving the concept of congestion pricing

Congestion pricing is an economic concept, not specific as the article is now. It applies to several economic activities, and essentially is a way to manage peak demand by raising prices. I will edit on this direction, and then, specific articles such as road or traffic congestion pricing, airport congestion pricing, internet pricing, etc. could be added. Mariordo (talk) 15:57, 17 November 2007 (UTC)

If anyone is interested in writing a short section after the intro, regarding a little more detailed description of the economic theory behind congestion pricing, please do so. Other users are welcome to collaborate on congestion pricing in specific public utilities and in transportation, mainly for airport congestion pricing. Mariordo (talk) 17:33, 17 November 2007 (UTC)

[edit] Proposed merged into Time-based pricing

Dear DeFacto. Sorry but I do not think this is a good idea, only the title names of the articles seem similar. Congestion pricing refers to public goods (utilities and public services) and their externalities (congestion in this particular case), while time-base pricing refers to private goods and services under free competition, essencially, how private firms do their pricing. Follow the references, particularly K. Button, and in particular all the existing literature on this subject in the transportation economics literature and papers. There are plenty of references in the congestion pricing article. Other readings to clarify the issue: welfare economics, congestion pricing is looking for maximizing social welfare, time-based pricing is about maximizing profits; Commons dilemma applies only to public goods and is one of the justifications for congestion pricing, it has nothing to do with time-base pricing; see also Pigovian tax, Externalities and follow the "see also" links. I request speedy deletion of the Merge banner. Thanks. Mariordo (talk) 01:43, 31 January 2008 (UTC)

See reply at Talk:Time-based pricing. -- de Facto (talk). 16:11, 31 January 2008 (UTC)
  • Keep - While the original Smeed Report into road pricing considered variable rates all actual transportation-related congestion pricing schemes to date have not been time-weighted (with the exception of Singapore). (copy of note at Time based pricing) Ephebi (talk) 09:07, 6 February 2008 (UTC)
  • Merge. The lead to time-based pricing states "The rational background of time-based pricing is expected or observed change of the supply and demand balance during time." That description applies exactly to congestion pricing too. For example, the London congestion charge, implemented to cut day-time congestion, a charge is made to enter the zone when the demand needs to be cut, during the working day, and no charge is made at other times. It attempts a "change of the supply and demand balance during time". Congestion pricing is an application of time-based pricing, with the emphasis on reducing demand at peak times - like with electricity, rail fares, etc. -- de Facto (talk). 10:57, 6 February 2008 (UTC)
  • Keep. OK, I've changed my mind. The time-based pricing article confuses the two concepts, and includes some stuff on congestion pricing which shouldn't be there - it needs cleaning up. I'll remove the tags. -- de Facto (talk). 23:08, 6 February 2008 (UTC)
  • Keep. See my explanations above and below. Also my two suggestions below. The proposed merge is like mixing water with gasoline. Congestion pricing is related to public goods and it aims at provoking a re-distribution of peak-demand, in order to gain more efficiency in the use of that public good. Congestion pricing is trying to avoid the Tragedy of the Commons, in economic terms. The time-base pricing article has nothing to do with these concepts Mariordo (talk) 17:06, 6 February 2008 (UTC)

[edit] Fixing/Undoing some of the latest edits for the correct terms

I will try to explain each change in the Edit summary, but in general, some of the wording introduced lately is technically incorrect or incomplete, then providing the wrong information in the article. For example Congestion pricing is exactly the same as Congestion charges, the former is the American term, the latter is the British one. See for example London congestion charge and New York congestion pricing, the concept is exactly the same in both cities, and by the way, sometimes is also a tax, see Stockholm congestion tax.

If still in doubt about this concept, then read the article on Singapore's Area Licensing Scheme the first ever implemented in the world, and as a previous edit said, it is indeed the first successfull implementation in the world, because it was. This is still a textbook case in economics and engineering transportation worldwide - for example, Hong Kong tried a pilot and it couln't implement because of public opposition. The Singapur's article explains clearly why this is not a regular toll and how is part of of a TDM scheme. Other wrong edit: Road pricing refers to ALL charges, such us gas tax, tolls, etc. and congestion charges are just part of those charges. Just read the article.

I will do as much edits as possible today, and some other later, but please, for those collaborating on this article, when in doubt ask here first. Reading beforehand the other wiki articles referenced in the text will help to avoid unnecessary editings and unnecessary questions. Congestion pricing is a solid concept within Economics and some technical jargon is required. Suggestions for using layman terms is welcome, but some simply don't have such a term, i.e., externalities. Mariordo (talk) 02:20, 1 February 2008 (UTC)

[edit] Question of POV

I am a little concerned by the way that this article is developing. It is portraying congestion pricing as only an altruistic concept, purely used for the "public good", and talking about it in flattering theoretical and parochial terms. That is just one, extreme, point of view of what it is.

In reality, congestion pricing may not be the best way of reducing congestion, there may be other more effective ways to reduce demand, but it may be a comfortable way for politicians to raise revenue - congestion/pollution being a convenient, and politically correct excuse to impose a charge. It may also be used as an excuse for doing nothing to increase the supply of the congested resource.

Congestion is described as a negative externality. That is also only one point of view. For those who rely on congestion as one of the main justifiers for a political project, or for those who derive a competitive advantage from it (bicycle suppliers, public transport operators, etc.) it is very definitely a positive externality.

The notion that users "cause" the externality (congestion) is also just one way of looking at it. Congestion occurs when demand for a shared resource exceeds supply. So an insufficient supply, or a deliberate limiting of supply, is also a cause.

Another negative is that it allows the wealthy to buy access to, what should be a public amenity, whilst denying fair access to the less-wealthy. The phrase "maximizing the net benefit for society" is extreme POV for the preceding reasons.

Different political administrations and theorists have dreamt-up their own terminology, jargon, and theories to shroud the concept in respectability and mystery - but we should not accept these "orthodox" views as the only views - we need also to reflect other significant views and opinions. -- de Facto (talk). 11:39, 1 February 2008 (UTC)

First the POV issue. By Wikipedia policies the article shall not reflect our opinions. Whether we like it or not, agree or not, the information provided so far is mainstream in transport economics (under free market conditions). The same rational has been used to justify pollution charges, the other practical implementation of paying for externalities. The cases are just examples of real life implementation of these theories. So it is portraying congestion pricing/charges as it is, this is NOT my opinion. But you are right this is NOT a perfect solution, so the next addition I was planning to do was regarding the controversy among economists of what shall be done with the revenues (go to the government general budget, go to finance transport infrastructure or give back to the public, usually for public transportation?). This is well documented in the literature, so it is neither my opinion nor original research.
The other key aspect, without a doubt, is the reaction of the users who actually have to pay. This issue is already briefly mentioned in the cordon area section. This is very polemical (New York and Hong Kong couldn't implement the scheme because of public opposition), but to avoid NPOV problems, I rather leave to each of the specific articles (Singapore, London, Stockholm, and New York), the recount of the public reaction on each of these cities, this info is already there. Finally, I agree with you with about unfairness, for example HOT lanes went to far, this is really a privilege for the rich. Later on I will search to see if there are enough reliable neutral sources to expand about this issue on this article. I will be out of the air for a week, when I come back from my vacation I will try to prioritize working on this article. Just in case, the TDM article also needs lots of work. Since yor are interested in transport, take a peek at the article on Intelligent transportation systems, really needs to be Wikified. Mariordo (talk) 12:54, 1 February 2008 (UTC)
My issue with POV is not that it reflects your POV, or that it doesn't reflect my POV, but that it only reflects the POV of a few theorists and vested interest bodies. The term congestion pricing has different meanings, and different definitions, for different groups. We seem only to be giving it one, currently, the one you describe as "mainstream in transport economics". They don't own the term - that is just their definition of it. -- de Facto (talk). 13:27, 1 February 2008 (UTC)
Yes, it is the POV of Economy as a discipline, it is not just a few theorists. People already won Nobel Prizes over these concepts. Read and look for in Google about the Commons dilemma and Tragedy of the commons, it helps understand why this concept has been mainstream in economics and why these kind of restrictions or economic penalties are necessary, like some "sin taxes".
Based on the info provided and the discussion, do you now agree that this article should not be merged with "Time-based pricing"? If so, would you be so kind to remove the "merge"banner. Thanks.Mariordo (talk) 14:00, 1 February 2008 (UTC)
In reply to your first point, that is exactly what I mean. It reflects only one (their) POV, it does not reflect dissenting views from with the economy discipline, nor does it reflect views from outside of it. Perhaps the article name should be changed to "Congestion pricing (economics theory)".
In reply to your second point. I am not yet convinced that it is not a sub-set of Time-based pricing. I was hoping there might be views from other editors. Let's leave it there for a few more days.
-- de Facto (talk). 14:12, 1 February 2008 (UTC)
OK, let's wait for someone else to give an opinion. When I come back to the article, I can include in the leading paragraph a couple of lines to make clear this is economics theory.Mariordo (talk) 14:50, 1 February 2008 (UTC)
Please let me know what do you think about the expanded and "improved" definition, I tried to avoid technical jargon as much as possible. Also, look at the hidden text in the description (section 1) regarding how these congestion charges should be calculated, but the jargon is too technical. I will try to put it in more layman terms after my vacation and need to look for the references. Also notice that this text raises the issues on which there is no consensus among economists, how to calculate optimal charge in practice, and what to do with the revenues, keep in the government budget or to redistribute to the users (additional infrastructure or improvements to public transportation).Mariordo (talk) 05:23, 2 February 2008 (UTC)

[edit] Balance

Mariordo makes a convincing argument that congestion pricing is related to the supply of public goods, rather than the supply of other types of goods. That's fine.

The contentious issues remaining, and those which we need to have a balanced presentation of are:

  • What is the definition of a public good? Many services can be funded entirely from tax revenues, and offered "free" at the point of use in one place, whilst in another place, although the service is largely funded from taxes, a fee may be charged for its use. The same service may be provided entirely free by a charitable organisation with funds raised from voluntary donations. Whilst elsewhere the same service may only be available on a commercial basis, with a market price charged to the consumer.
  • Is congestion always a negative externality? It depends on whose view you take. For a pedestrian, it is easier, and safer, to cross a street of near stationary vehicles, than it is to cross fast flowing traffic. For a cash-strapped government authority, road congestion may offer a lucrative revenue opportunity.
  • What is responsible for congestion? The lack of supply, or excessive demand. On roads, severe congestion can be created, and eliminated, by simple traffic management changes. In the UK, public good state-provided hospitals are held responsible for congestion in their services, and penalised.
  • Who suffers the cost of congestion? A large part of the cost of road traffic congestion is borne by the delayed road user.
  • What are the objectives of congestion pricing - to suppress demand, to charge for the cost of the "negative externalities", or to raise revenue. Congestion in the demand for the public good social housing isn't generally solved by charging the user, but by increasing supply, and by prioritising allocation.

We don't want the article to leave the reader with only these views:

  • That congestion is always bad.
  • That congestion is only caused by unreasonable excess demand and not by an unreasonable supply shortfall.
  • That the delayed user doesn't already shoulder a large part of the cost of the congestion.
  • That the best way to solve congestion is to charge, not compensate, the user.
  • That the only solution is to suppress demand, not to increase supply.
ANSWER: I think most of the questions you asked are answered below, in the proposal of a new section, and several of them are valid and have been discussed by transport economists. But following Wiki policy, original research (see WP:OR) is not allowed, even when you are right. I just want to address this specific question. Within an urban network of streets, providing more lanes or overpasses will consume urban land, so usually increasing supply (upgrading or more lanes) is not an option. Furthermore, as capacity is increased, more autos will enter the city center, so more parking space is required. You have to have a balance between land dedicated for transportation and land use for parks, office buildings, housing and all other urban land uses. In practical terms this lesson was learned the hard way in the city of Los Angeles, during the late 50's and the 60's, until they realized that building more freeways and tunnels was futile, more cars were entering the city, more people move to the suburbs, city sprawl worsen, and bottlenecks keep moving from one place to another; if they were to keep building more roads there was not going to be any city left. Both, transport economic theory and empirical evidence show that more infrastructure attracks more demand. So in may cases increasing road supply in the city core is simple not feasible, not even with huge investments in infrastructure. Also, just imagine Paris or London, which historical building the citizen are willing to sacrifice in order to expand the city streets? So there is no supply shortfall or lack of willingness by public authoroties. Road capacity within downtown areas is finite, that is the reason the strategies and policies are aimed to curb demand. Mariordo (talk) 03:40, 28 February 2008 (UTC)
There may be reasonable excuses for not building more roads at, or above street level in historical or dense urban situations. That doesn't imply that supply cannot be increased by other strategies in those locations, or by those strategies in other locations. It certainly doesn't imply that the only solution to congestion is to suppress demand. In the same way that poor traffic management can cause congestion, good traffic management can relieve it. You only need to look at London, as you mention above. Since the introduction of congestion pricing, traffic levels have dropped, and initially congestion dropped too, but more recently congestion has increased again with no corresponding increase in traffic levels. The reasons for the congestion increase are traffic management changes. WP:OR states that if you insist in asserting that demand suppression is the only solution, then you need to attribute precisely whose opinion that is, and WP:NPOV states that you need to balance that opinion with other significant (not necessarily expert) opinions. -- de Facto (talk). 09:44, 28 February 2008 (UTC)
(1) I think the oppening statement you included at the beginning of the section "Description" is great, it makes clear that congestion pricing is just one of several strategies, helping to keep the NPOV of the article and it is properly referenced, to me, that edit of yours settles that issue. Since you insist in making minor changes without the sources, most of your edits are WP:OR, and you just keep asking me for the sources of concepts already referenced just because you do not seem to like the principle or policy (and by the way, an article should not be full of citations from a book, particularly just because you do not bother to check the sources - anyway I will provide for you in the Talk page the transcription you requested, but please be reasonable, I can not keep providing book transcriptions at your request nor endlessly explaining to you transport economics. Amazon has these books for sale). Thus, I will continue editing those WP:OR edits and asking you for proper sources/references, though I rather prefer to spend my time more constructively improving this and other articles I am working on, in collaboration with you and other editors interested in the subject. (2) You have raised several interesting issues regarding the practical implementation of congestion pricing that clearly will improve the articles's NPOV. Since right now I do not have enough time to work on the "Controversy" section, please go ahead and work on it, based on the info I provided below and other legitimate sources you might find in the web. Did you read the outline I proposed below? it covers most of the issues you have already raised, but as WP:OR. Tonight I will try to edit/write, based on the outline and references below, a short sentence at the end of the leading paragraph of the article, summarizing the issues and controversies associated to this policy when it goes from theory to practice, or you can give a try. Mariordo (talk) 13:19, 28 February 2008 (UTC)
We are making progress. Wikipedia:Verifiability, specifically Wikipedia:Verifiability#Burden of evidence requires the use on inline citations for "any material challenged or likely to be challenged". These tie specific statements to specific sources to make their verifiability easier. Additionally it is not unreasonable to ask for a direct quote to be provided from a cited source, especially for sources that are not available online (see Template:Request quotation). -- de Facto (talk). 14:08, 28 February 2008 (UTC)
Verifiability has its limits, but let's clarify your doubts. First, to provide a clear answer, some economic concepts and the famous ceteris paribus assumptions, and sorry, that's how economics works:
  • (i) From Button (1993) pp. 122: "The principles of pricing: Pricing is a method of resource allocation; there is no such thing as the 'right' price but rather there are optimal pricing strategies which permit specified goals to be obtained. The optimal price, for example, to achieve profic maximisation may differ from that needed to maximise welfare or ensure the highest sales revenue". Comment: I did not realize that the wiki link for the word pricing is directed to the wrong definition. Since the definition used in microeconomics is not available in Wiki, I am directing toward Free price system, since simple pricing directs towards a business definition, not one from economics.
  • (ii) In economics the word efficiency has a different meaning than in day to day uses. It is called Economic efficiency, and in the case of congestion pricing refers to a system where "No one can be made better off without making someone else worse off" (just follow the wiki link). When we talk about optimal pricing is the same as efficiency pricing. See the article Pareto efficiency or Pareto optimality. "An allocation is Pareto efficient or Pareto optimal when no further Pareto improvements can be made". I will redirect the word "efficiency" to that article so no one gets confused, and also make the link in the See also section. Alternatively can be edit as "... is an efficiency or optimal pricing strategy.." always with the link to Pareto optimality.
  • (iii) Marginal cost pricing (wiki Marginal cost). From Button (1993) pp. 126: "Welfare economics takes a rather wider view of pricing, looking upon price as a method of resource allocation which maximises social welfare rather than simply the welfare of the supplier. In some cases, since the good or servie is actually provided by a public agency, this may be equated with maximising the supplier's welfare..." later on the same page: "In other words, social welfare is maximised when price is equated to marginal cost. ...This policy is a fairly well established one in economic theory and, indeed, formed the basis for UK public enterprise pricing from 1967."

And now the two quotations you requested (which for style, I think we should not fill the article with lots of quotations, since these are well-established economic principles and proper reference was given) and it reflecting the concept I did the original edit trying to avoid as much economic jargon as possible, but the wiki links included provide a follow up for those interested:

  • (1) The article says: A stated aim of this pricing strategy is to make users more fully aware of the costs they impose upon one another when consuming during the peak demand, and to pay for the additional congestion they create, thus allowing the redistribution of the excess demand in space or in time,[1][Quotation needed from source]

"7.3 Congestion charges. It is not only in the context of pollution that externality pricing has been advocated. One idea for optimising the level of congestion is to use the price mechanism to make travellers more fully aware of the impedance they impose upon one another. The idea is that motorists should pay for the additional congestion they create when entering a congested road or that aircraft should pay a premium to land at busy times of the day.... The optimal road price, as such a charge is called, reflects the difference between the marginal cost of trip-making and the average cost (as defined in Chapter 5). ...Road pricing generates a welfare gain of (Pcde - abc). This is because the traffic flow is reduced by (Q-Q*) resulting in some motorists who are deterred from using the road..."

– Button (1993) page 153, section 7.3

Comment: this concept is always explaind with a graph showing road demand and the curves for average cost and marginal cost, that explaind the little math in the quotation. At the end of the article, I was planning to include a more theorical section after the Description for the readers with a basic knowledge in economics. Anyway, I translated "deterred" for "redistibution of the excess demand in space or in time", because as common sense and practical implementation demonstrated in Singapore (see the wiki article) some users travel at different times, other took alternative routes or just swicht to mass transit. To avoid any doubts on WP:OR, I will add another reference from Small et al (2007), the quotation is the following, "this section provides the basic economic motivation for congestion pricing":

"This implies that short-run marginal cost exceeds short-run average variable cost. Intuitively, this is because short-run marginal social cost mc includes not only the cost incurred by the traveler herself but also the additional cost she imposes on all other travelers by adding to the congestion they encounter. This additional cost is known as the marginal external congestion cost, here denoted mecc. An efficient level of road use is obtained when each trip that is made provides benefits as least as great as its social cost, mc, and when no trip meeting this condition is suppressed. To obtain this situation through pricing, each traveler should face the marginal social cost of her trip. This requires a charge equal to the difference between the marginal cost and the cost already borne by the traveler, which is short-run average variable cost, c. This charge, known as the optimal congestion fee or congestion toll, is therefore T = mc - c = mecc. These arguments can be formalized by determining a Pareto-optimal distribution of traffic, defined as one that maximizes any one person's utility while holding all others' utilities constant and meetting aggregate resource and technological constraints. Equivalently, we find the allocation of road space to users that maximizes net welfare, defined as the difference between aggregate consumer benefit and total cost...." Small and Verhoef (2007) page 120, section 4.1

  • (2) The article says: Congestion pricing is an efficiency pricing strategy that requires the users to pay more for that public good, thus increasing the net benefit for society.[citation needed]
I think the two quotations above cleary support this statement (when talking about welfare gain, actually the area under the graph I mentioned is the net benefit for society or welfare gain). I will repeat the same references and delete the request for a quotation. Mariordo (talk) 04:15, 29 February 2008 (UTC)
Thanks for all that. I think the phrasing of those is now compatible with the references. -- de Facto (talk). 10:11, 29 February 2008 (UTC)
  • That suppressing demand by price doesn't favour the wealthy at the expense of less-wealthy.
  • That competitive advantage can best be achieved by handicapping the competition, rather than by making alternative offerings more attractive.
  • That the main driver for the introduction of congestion pricings is objective, rather than that it is usually subjective, and political.

-- de Facto (talk). 11:19, 7 February 2008 (UTC)

FURTHER WORK ON THE ARTICLE (1) As I mentioned before, in the following weeks I will be working on a section regarding controversy about congestion pricing (mainly focus to road pricing). There is controversy between scholars as to how the money raised by the urban tolls should be spent; a list of problems regarding public opposition; alternative strategies; etc. To keep POV proper references from transportationspecialists will be presented. There is also controversy among urban planners, already mentioned in the article, that can be expanded, and I will pick some of the controversy in the public arena (through the serious press) in New York, London, etc. But to develop this section it will take time. (2) As to electric power, the move from time-based pricing to here it is more complicated that I though. First, time-based pricing article is so badly constructed that just cutting the electric power part will make it worse than it is now. I think some cross-references between the two articles, and the ones I will mention next. Second, in energy utilities they use the same concepts as in transport pricing, but with different names. See for example the articles Demand response, which is congestion pricing in electricity grids, or Energy demand management, which is equivalent to Transportation Demand Management). My opinion is that because this subject is so developed in electricity utilities, the congestion pricing article shall just make a quick mention, and redirect to the more specific articles. de Facto and anyone else interested, I would like to hear some opinions before developing the article in this direction.Mariordo (talk) 02:43, 12 February 2008 (UTC)

User:Mariordo raised concerns on my talk page regarding my recent edits. My edits (there were five) were an attempt to begin to address the serious POV and balance issues that I had raised previously (see above), and which had not been answered. Specifically:

  • In this one I inserted a sentence to remind us of the details of the "externality" in question (congestion), and edited an unsourced definition of congestion pricing which relied on a specific point of view (POV) asserting that the "externality" is caused by the "users", that the user payments are for the public good, and that the result would be to maximise the "benefit for society", to reflect the more balanced POV that congestion pricing is a measure which targets one of the causes, over demand, rather than the other cause, lack of supply.
  • In this one I inserted, into an unsourced sentence, the qualifier "rather than the suppliers" to clarify that as a valid alternative option, and replaced the unsourced POV statement "perceived by the users as supplied for free" with the more neutral and more accurate one - "tax-funded".
  • In this one I replaced "The aim [of congestion pricing]" with "One of the aims...", as there are clearly other aims in addition to those mentioned, I pointed out again that the measure doesn't tackle supply short fall, that over demand is not the only cause of congestion - so the cost isn't only caused by the user, that "auto travel" isn't the only target, removed the unsourced POV phrase "better manage", and rephrased an unsourced sentence.
  • In this one I clarified what the Smeed report contained, and corrected the unsourced sentence which suggested that the Smeed proposals were "nearly implemented".
  • In this one I put a context in front of an unexplained verbatim quote.

If you disagree with any of those edits, or the reasons, please edit as you see fit, with necessary references, and put a brief explanation in the 'Edit summary'. We should strive to co-operate in the creation of an article which reflects a truly neutral point of view. -- de Facto (talk). 16:14, 27 February 2008 (UTC)~

You bet I will when I have time, but please, did you read the wiki articles about the economic concepts I suggested to you in the (Talk:Time-based pricing) for the discussion about merging this article with Time-based pricing? For example, your first edit, YOU are changing the economic definition of externalities, just wiki Externalities and check for yourself, also the references provided explain precisely that concept you are modifiying. Did you follow those references? You asked what is a public good, did you Wiki it? This economic theory is mainstream, there are guys who won Nobel Prizes for developing these concepts. If you disagree with the theory, that's a different issue, and a Wikipedia article IS NOT the place for you manifest your discontent or my opinion or yours, it is against Wiki policy. I have not had time to edit the section on critics or controversies about this economic theory. If you want to try, give me your e-mail (in my personal page) and I will provide you the materials for you to do it, properly referenced, from the bibliography indicated at the end of the article. Mariordo (talk) 19:38, 27 February 2008 (UTC)

[edit] Outline for proposed new section on controversy about congestion pricing

Before editing/undoing some of the latest edits (due to original research and lack of sources), let me outline to (User Talk:DeFacto) or any other editor interested or willing to collaborate with the article, a proposal for a section about the controversial issues surrounding congestion pricing for urban roads. Anyone is welcome to work on this section, but the following ideas are almost a transcription from the sources (which explain in more detail each of the issues identified), so please, do not cut and paste on the article, please write it from scratch.

From Button, Kenneth J. (1993), Transport Economics 2nd Edition, Edward Elgar Publishing Ltd, London, ISBN 978-1852785239  pp 154-159:

  • (1) The difficulty of devising a practical method of collection. This is no longer an issue, now the technology for electronic toll collection allows barrier free charging to enter the city center.
  • (2) The possibility of undesirable distribution repercussions/Inequality issue. With congestion charges the use of the tolled road depends on the user's income capabilities to pay that urban toll, then it is likely to privilege the rich, and the less wealthy is the one switching to public transit.
  • (3) There are difficulties in disposing of the revenues raised. This is a hot issue among scholars. It can be used to improved public transport (like London) or to invest in new road infrastructure (like Oslo) or direct transfer payments to former road users. There are several papers discussing this issue. This policy is not intended just to increased public revenues or to become in another tax. Just Google it for more sources.
  • (4) The impact on freight costs may prove inflationary if the road price is passed down to final consumers.
  • (5) The demand functions for road use are more complex than simple analysis suggests. In practice the charge becomes a trial and error experiment.
  • (6) Congestion pricing is a first-best solution in a secon-best world. This has to do with marginal cost pricing of road space if all other goods in the economy are also marginal cost priced, which is not the case.
  • Kenneth also discusses about the political concerns because of public rejection of this policy, due mainly to the two issues in bold type above.

Now, from * Small, Kenneth A.; Verhoef, Erik T. (2007), The Economics of Urban Transportation, Routledge, New York, ISBN 978-0-415-28515-5 , pp. 125-127 (also the existing cases for urban areas are discussed pp. 148-151)

  • (1) Based on the economic principles behind congestion pricing (the optimal charge should make up for the difference between the average cost and the marginal cost), the practical challange of setting optimal link-based tolls is daunting given that neither the demand functions nor the link-specific speed-flow curves can be known precisely.
  • (2) Heterogeneity of users. Should urban tolls be differentiated across users?
  • (3) Distributional impacts and acceptability of congestion pricing. Although imposition of the optimal toll generates a net welfare gain, the social and political acceptability of road pricing has proven to be very limited. According to theory, because of the price increase, some users are worse off unless they receive benefits from the use of toll revenues. The users who shift to some less-preferred alternative (such as public transportation or not traveling at all) are also worst off. ...Ignoring revenue allocation, then, all the initial travelers lose from the policy...The only gain is to the public sector, in the form of toll revenues....the outcome depends on how revenues are used and on whether the authorities are able to effectively and credibly commit to these uses and communicate them to the public.

Other sources and issues (effect on the urban environment, on retail sales, etc.) can be brought from the specific articles of the cities that already have implemented congestion pricing. This is a start for a section dealing with the controversy of this policy, within Wiki policies, sourced and no original research. Mariordo (talk) 02:34, 28 February 2008 (UTC)

    • PD: the other posible section about congestion pricing in public transit and electric power supply (or public utilities in general) is a bit more complex, because in this case the supplier incurs in a direct variable cost to attend the peak-load demand, therefore, the congestion charge is covering part of that cost. In the practical aplications for roads, airports or the Panama Canal, the supplier DOES NOT incurs in any additional costs, other than the operating cost of the electronic tolling or any costs associated with charging the congestion fee. Therefore, this posible new section has a slightly different theoretical basis that has to be explained. Mariordo (talk) 02:34, 28 February 2008 (UTC)