Congestion pricing charges vehicles to use crowded roads or to enter a defined zone during busy periods, using price to reduce traffic and, usually, to fund transit with the revenue.
The best-known form is a cordon or zone charge. Singapore pioneered road pricing in 1975, London introduced its central charge in 2003 and Stockholm made its cordon permanent in 2007. New York began the first U.S. cordon program in Lower Manhattan in January 2025. Other forms include priced express lanes and dynamic tolling.
One express lane at the morning peak. More drivers want it than it can carry. Slide the toll and watch speed and throughput.
When the lane is free, about 2,600 drivers an hour want it, more than its roughly 1,900-vehicle capacity. Traffic breaks down into stop-and-go at about 22 mph and the lane carries only about 1,550 vehicles an hour. A toll of about $2.75 trims demand just below capacity: traffic flows near 47 mph and the lane carries about 1,860 vehicles an hour, more than when it was free. Much higher tolls leave the lane underused.
Illustrative: one lane, capacity about 1,900 vehicles an hour, flow dropping to about 1,550 once traffic breaks down. Priced lanes adjust the toll every few minutes to keep traffic flowing, often targeting 45 mph or faster.
The parking connection
- Parking prices are a form of congestion pricing at the destination: they affect whether people drive and how long they stay. See dynamic pricing.
- A cordon charge can lower demand for parking inside the zone and shift it to park-and-ride facilities outside. See park-and-ride.
- Underpriced curb parking inside a priced zone undermines the charge by encouraging circling.
The Parkonomics view
Road pricing and parking pricing work best together. A city that prices entry to its core but leaves its curbs cheap is charging drivers to come in and circle.
Related terms: Dynamic Tolling, Dynamic Pricing, Transportation Demand Management, Park-and-Ride, Curb Management