Congestion Pricing as a Traffic Management Tool: Evaluating the Impacts at New York City’s Interstate Crossings

The economic rationale for congestion pricing is well known: Users of a congested facility do not account for the costs they impose on other users, and the resulting volume is inefficiently high. While there is broad support for the concept of congestion pricing, policy-makers are often uncertain about the actual traffic impacts of pricing. In part, this is due to a lack of congestion pricing mechanisms until the last decade. Another shortcoming arises from data that have given only imperfect estimates of behavioral responses. This paper attempts to address both issues by reporting findings regarding the effectiveness of congestion pricing in the New York City area. With an unusually rich data set, we estimate responses to value pricing measures introduced in 2001. A major issue in evaluating the impacts of value pricing that has received scant attention in the literature is whether shifting peak and off-peak shares are due to changes in congestion itself rather than pricing incentives. In particular, we are concerned with addressing whether the phenomenon of “peak-spreading” may be causing our estimates of pricing impacts to be biased. To control for this, we include in our model explicit measures of the level of congestion, producing unbiased estimates of pricing impacts.