Is road pricing effective in abating pollution? Evidence from Milan

• The introduction of the Ecopass in 2008 reduced Milan’s traffic congestion.
• Regression discontinuity design indicates a sizeable reduction in the concentration of carbon monoxide and particulates.
• Positive effects disappeared after only one week.
• Not charging motorbikes and limitations to the area covered limits city wide benefits.

We estimate the effect of a road pricing policy introduced in Milan in 2008 on concentrations of benzene, carbon monoxide, particulates, nitrogen dioxide and sulphur dioxide. We found a sizeable effect of the Ecopass on air quality in terms of reduction in the concentration of carbon monoxide and particulates a few days after its introduction, although this effect disappeared after only one week. We interpret these results as indicative of an inefficient policy design: motorbikes were not charged and the treated area is too limited to generate positive outcomes for the whole city. Further evidence from a natural experiment given by a temporary suspension of the charge in 2012 confirms our hypothesis on the incentives for motorbike usage.