Congestion Pricing

Over the past two decades, China has experienced a dramatic increase in auto ownership and uses, with the number of private-owned vehicles increasing more than 70 folds in twenty years, from 0.82 million in 1990 to 59.39 million in 2010. Urban roads in major Chinese cities thus have become much more congested. Congestion pricing helps to internalize traffic externality and reduce congestion. Practically, it has been implemented in a number of countries. This paper first presents the economic theory of congestion pricing. It then demonstrates the implementation of congestion pricing on the State Route 91 in southern California. Finally, it discusses implications to China. This paper focuses on implementation issues, including project financing, fee structures, benefit-cost analysis, and public acceptability.

Keywords: China, Urban, Transportation, Taxes, Public Policy