The Effect of Congestion Charge and Fuel Arbitrage on Air Quality in Stockholm

Abstract: In August 2007, the congestion charge is launched in Stockholm after a seven-month trial period in 2006. This paper applies empirical methods to estimate the effects of the implementation of congestion charge on the air quality in Stockholm. I find that the trial and permanent congestion tax have reduced the emissions of major air pollutants. I also find evidences that the time-varying congestion pricing decreased the air pollutions in peak hours, and suggestive signs of peak spreading onto non-peak hours. In addition, I show that the fuel switching behavior by FFV (Flexible Fuel Vehicle) motorists might have mixed effects on different air pollutant emissions.