4 ms·

They don't raise the price to deter people. Because the reality is it is a money-making scheme so they price it just right so that most people will pay it. If

They don't raise the price to deter people. Because the reality is it is a money-making scheme so they price it just right so that most people will pay it. If they really cared about stopping congestion they'd raise the price. This would very very very simple for them to do. But then they lose a major source of revenue. As a result it is clear that they don't care about reducing congestion. It's basically a toll now, because it has not reduced congestion in the long term. I deeply suspect NYC will be the same once the realisation creeps in that the fee isn't really that much to pay.

JumpCrisscross 1y ago
> the reality is it is a money-making scheme so they price it just right so that most people will pay it Not how a Laffer curve works [1]. Demand for almost everything is non-linear and usually somewhat logistic. Increasing the tariff by 20% doesn’t reduce demand by 17%. Being congested practically guarantees one can raise revenues by raising the charge. The limit on raising charges isn’t revenue concerns. It’s the politics of raising a use fee. [1] https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve
- mattlondon 1y ago
  I think you are missing the point and holding the laffer curve wrong here. The justification for the congestion charge in London was to reduce congestion, not raise revenue. The laffer curve says that as you increase the rate, the activity of the thing you are taxing decreases and so revenue decreases with it. So therefore if they increase the fee, congestion should decrease if you believe the laffer curve applies here. If they wanted to reduce congestion, just set the fee to the far right of the laffer curve and watch as congestion decreases (even if they raise no money as a result) But actually they have not reduced congestion at all in the long term. Instead they've optimised the fee for the peak or the "sweet spot" (t* in your linked article) where they can get the most money out of it, not decrease congestion the most. They've raised the fee to the point where there has been no change in behaviour/congestion, and they make the most amount of money they can. If they raise the fee more they start to reduce their revenue as congestion drops due to shifting to the right of the curve. They could very easily increase the fee and drive down congestion based on the laffer curve if that is what they really wanted, yet they don't. From this we can make the fairly strong assumption that this is not about reducing congestion , it's about extracting the optimum amount of money. Meanwhile congestion is basically the same as it was before the congestion charge was introduced, except now TfL get £15 per car per day as a nice bonus to fund the various vanity projects.
  - rdsubhas 1y ago
    They wanted to reduce congestion. Not eliminate traffic. At that time. One can conclude the policy worked at it's time. 20 years later, today is a different day. One could say congestion is there today, but they can't say how much further congestion has been avoided. Municipality can decide to reduce (not eliminate) it again today. It is the laffer curve, in 3d (time).

JumpCrisscross 1y ago

> the reality is it is a money-making scheme so they price it just right so that most people will pay it Not how a Laffer curve works [1]. Demand for almost everything is non-linear and usually somewhat logistic. Increasing the tariff by 20% doesn’t reduce demand by 17%. Being congested practically guarantees one can raise revenues by raising the charge. The limit on raising charges isn’t revenue concerns. It’s the politics of raising a use fee. [1] https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve

mattlondon 1y ago
I think you are missing the point and holding the laffer curve wrong here. The justification for the congestion charge in London was to reduce congestion, not raise revenue. The laffer curve says that as you increase the rate, the activity of the thing you are taxing decreases and so revenue decreases with it. So therefore if they increase the fee, congestion should decrease if you believe the laffer curve applies here. If they wanted to reduce congestion, just set the fee to the far right of the laffer curve and watch as congestion decreases (even if they raise no money as a result) But actually they have not reduced congestion at all in the long term. Instead they've optimised the fee for the peak or the "sweet spot" (t* in your linked article) where they can get the most money out of it, not decrease congestion the most. They've raised the fee to the point where there has been no change in behaviour/congestion, and they make the most amount of money they can. If they raise the fee more they start to reduce their revenue as congestion drops due to shifting to the right of the curve. They could very easily increase the fee and drive down congestion based on the laffer curve if that is what they really wanted, yet they don't. From this we can make the fairly strong assumption that this is not about reducing congestion , it's about extracting the optimum amount of money. Meanwhile congestion is basically the same as it was before the congestion charge was introduced, except now TfL get £15 per car per day as a nice bonus to fund the various vanity projects.
- rdsubhas 1y ago
  They wanted to reduce congestion. Not eliminate traffic. At that time. One can conclude the policy worked at it's time. 20 years later, today is a different day. One could say congestion is there today, but they can't say how much further congestion has been avoided. Municipality can decide to reduce (not eliminate) it again today. It is the laffer curve, in 3d (time).