Quantifying Responses to Changes in the Jurisdiction of a Congestion Charge : A Study of the London Western Extension

This paper assesses and quantifies responses to changes in the area over which the congestion charge is applied, with a successive focus on (i) an extension and (ii) a reduction in the size of the zone. We exploit the unanticipated nature of both the implementation and removal of London's Western Expansion Zone (WEZ) as quasi-natural experiments. We use the UK Department of Transport Annual Average Daily Flow (AADF) data, which records traffic flows for seven transport modes (including cars, buses, bicycles, heavy and light goods vehicles). Using a difference-in-differences approach, we find that the introduction of the WEZ led to a 4.9% decline in road traffic volume. HGVs traffic did not significantly change post-WEZ, which indicates that their road demand is price inelastic. The removal of the WEZ led to no significant variations in traffic. This result suggests that unanticipated financial constraints may have a lasting effect in the formation of new habits and that there may be inertia in individual behaviour