Green cars sterilize congestion charges: A model analysis of the reduced impact of Stockholm road tolls

Before–after comparisons indicate that the impact of the road toll in Stockholm on traffic volumes was smaller when the system was re-opened in 2007, compared to the effect during the trial in 2006. We calibrate a modal-choice model on data for Stockholm from before and during the trial and use it to simulate the effects of some seemingly subtle changes of the design of the congestion-charge scheme. We find that the growth of the share of exempted “green” cars and the decision to make charges deductible from the income tax was about to considerably reduce the positive welfare effect of the toll at the time when the “green” car exemption was abolished.

► Simulations are made with a model calibrated on data from the Stockholm road pricing trial. ► “Green” cars were initially exempted from congestion charges. ► This exemption would have erased the positive welfare effects, had it not been abolished.