Economic Theory of Congestion Pricing

The Economic Theory of Congestion Pricing suggests charging users a fee for road or transportation access during busy times to reduce traffic congestion. By assigning a cost to using roads when they are crowded, it encourages some drivers to travel at less busy times or choose alternative routes or transportation methods. This helps balance demand, decreases traffic jams, and improves travel times for everyone. Essentially, it uses pricing as a tool to manage limited road capacity efficiently, aligning individual user costs with the broader societal goal of smooth and sustainable transportation.