The Role of Tradable Credit Schemes in Road Traffic Congestion Management

TLDR

Road traffic congestion is not yet priced into the sector, prompting various mitigation instruments, and while most research has focused on pollution, there is clear potential for tradable credit schemes to manage congestion. This paper investigates whether tradable credit schemes can feasibly mitigate traffic congestion and whether they offer advantages over other instruments. The authors outline existing congestion mitigation approaches and then discuss the key design issues of a tradable credit scheme. This review is the first to focus on tradable credit schemes for road traffic congestion management.

Abstract

Road traffic congestion is not yet reflected in current market prices within the sector and has given rise to a number of instruments to mitigate the resulting negative impacts. The focus of this paper is the tradable credit scheme — an incentive-based economic measure — in order to address traffic congestion. The research questions are (1) whether the state-of-the-art in the literature suggests that tradable credit schemes could be feasibly introduced to mitigate congestion, and (2) whether a tradable credit scheme could have advantages over other instruments. A brief outline of congestion mitigation approaches is provided first to position this type of economic instrument with respect to other measures. The broad issues in the design of a tradable credit scheme are then presented. Most research to date has focused on the use of tradable credits to manage related pollution, but it is clear there is potential to design a scheme for traffic congestion management. To date this is a novel review of tradable credit schemes that has focused specifically on their role in road traffic congestion management.