The Effect of a Congestion Charge on Traffic: The Case of London 20-11

Based on very detailed monitoring data, we examine the effectiveness of the City of London’s congestion charge on traffic. Through multiple Regression Discontinuity Design estimations, we found that the introduction of the congestion charge had an immediate effect and brought significant social welfare, but the effect was diminished as time went on, which explains the need for periodic charge rate adjustments. Moreover, when the charges expanded to new zones, there was a spillover effect to the old zones. At the same time, the charge also affected drivers’ choice of when to drive.