Peak-Hour Road Congestion Pricing: Experimental Evidence and Equilibrium Implications

Developing country megacities suffer from severe road traffic congestion, yet the level of congestion is not a direct measure of equilibrium inefficiency.I study the peak-hour traffic congestion equilibrium in Bangalore.To measure travel preferences, I use a model of departure time choice to design a field experiment with congestion pricing policies and implement it using precise GPS data.Commuter responses in the experiment reveal moderate schedule inflexibility and a high value of time.I then show that in Bangalore, traffic density has a moderate and linear impact on travel delay.My policy simulations with endogenous congestion indicate that optimal congestion charges would lead to a small reduction in travel times, and small commuter welfare gains.This result is driven primarily by the shape of the congestion externality.Overall, these results suggest limited commuter welfare benefits from peak-spreading traffic policies in cities like Bangalore.