Discussion Paper

Long-Term Consequences of Congestion Pricing: A Small Cordon in the Hand Is Worth Two in the Bush

Oct 26, 2006 | Elena A. Safirova, Sebastien Houde, Conrad T. Coleman, Winston Harrington, D. Abram Lipman


We evaluate and compare the long-term economic effects of three cordon-based road pricing schemes applied to the Washington, DC, metropolitan area. To conduct this analysis, we employ a spatially disaggregated general equilibrium model of a regional economy that incorporates the decisions of residents, firms, and developers, integrated with a spatially disaggregated strategic transportation planning model that features mode, time period, and route choice.We find that all cordon pricing schemes increase welfare of the residents, as well as lead to GDP growth. At the optimum, the larger cordon and a double cordon lead to higher benefits than the small cordon encompassing downtown core. Nevertheless, the small cordon seems to be a safer bet because when the toll charge is set suboptimally, the net benefits from the small cordon compared to the optimum change negligibly, while the net benefits from the larger cordon decline sharply as the charge deviates from the optimal level.