Road Pricing 4: Case Study: The Implementation of Electronic Road Pricing in Hong Kong

Abstract

Congestion pricing, popularly known as road pricing, aims to reduce excessive traffic during rush hours to the Central Business District (CBD). Since the social cost of a trip typically diverges from its private cost, a congestion charge is imposed by an economic efficiency-enhancing authority to internalize the external effect brought about by a motorist. By doing so, total travel times by motor cars and buses to and from the CBD, together with their vehicle operating costs, are saved. In a wider context, road pricing is the application of market-oriented principles to curtail excessive automobile traffic and to encourage the use of public transportation. Using the framework of the previous three articles, this article provides a case study of the application of electronic road pricing in one city, Hong Kong.