Congestion Pricing At The Wrong Price

Congestion pricing in London seemed to be working, until it went afoul of basic economics. Now it's harming public transit. [Link corrected.]

1 minute read

August 29, 2003, 5:00 AM PDT

By Chris Steins @planetizen

"When working out how much a certain number of people would be willing to pay for a privilege, economists construct something called a "demand curve." When they did it for this exercise, they estimated that a reduction in traffic of 15 percent would require that £5 fee. Unfortunately, they got their sums wrong. The reduction in traffic has been far greater than anticipated. This has several consequences. First, it has meant a shortfall in Capita's revenues. Livingstone has been forced to address this problem by granting them £32 million of London taxpayers' money to allow them to make their required profit... As a result, he has been forced to postpone a planned extension to the Docklands Light Railway." [Thanks to Joan Friedman for an updated and corrected link.]

Thanks to Transport Policy Listserv

FULL STORY: Down the Tube

Friday, August 29, 2003 in Tech Central Station - Europe

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