Who Will Be Affected by a Congestion Pricing Scheme in Beijing?

Equity concerns have been an important obstacle to adopting congestion pricing, in both developed and developing countries. However, the existing evidence on the equity effects of congestion pricing has come only from developed countries. In this paper, we shed light on the distributional consequences of a congestion pricing scheme currently under consideration in Beijing. We find that under this scheme, which covers the areas within the city’s third ring road, a very small proportion of motorized trips would be subject to the full congestion charge. The directly affected individuals typically have higher household incomes and are wealthier than individuals who are not directly affected by the congestion pricing scheme. This finding reflects the fact that individuals who drive to work in Beijing are relatively wealthy. More important, we find that the Suits index for the congestion charge is 0.027, indicating that the congestion charge is slightly progressive.

Keywords: congestion pricing, distributional concerns, equity

JEL Classification: H23 (Externalities and Redistributive Effects)