Housing rent and road pricing in Milan: Evidence from a geographical discontinuity approach

To cope with severe problems of pollution and congestion, a road pricing scheme (the Ecopass) to enter the city centre was introduced in Milan in January 2008. This paper assesses the impact of such a policy measure on the housing market in terms of variations in rent within the treated area. To this end, we adopted a geographical difference-in-discontinuities approach, which allowed us to control for area specific factors and to identify the effect of road pricing at the boundary of the treated area. By using detailed data from 55 zones over the period 2007-2012, we found that the Ecopass has had a small and positive impact on housing rent, equal to +0.75%.