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.