Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 1/2021: Congestion pricing, air pollution, and individual-level behavioral responses

Elisabeth T. Isaksen () and Bjørn G. Johansen ()
Additional contact information
Elisabeth T. Isaksen: Ragnar Frisch Centre for Economic Research, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Bjørn G. Johansen: The Institute of Transport Economics, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Abstract: This paper shows that differentiating driving costs by time of day and vehicle type help improve urban air quality, lower driving, and induce adoption of electric vehicles. By taking advantage of a congestion charge that imposed spatial and temporal variation in the cost of driving a conventional vehicle, we find that economic incentives lower traffic and concentrations of NO2. Exploiting a novel dataset on car ownership, we find that households exposed to congestion charging on their way to work were more likely to adopt an electric vehicle. Heterogeneity analyses show strong socioeconomic gradients in the transition towards low-emission cars.

Keywords: air pollution; electric vehicles; transportation policies; congestion charging

JEL-codes: C33; H23; Q53; Q55; Q58; R41; R48

100 pages, May 4, 2021

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