City tolls that work

Most economists agree that road congestion pricing is a very effective measure to fight traffic jams in cities. Nevertheless, due to its very low public acceptability, there are almost no cities with the road pricing; notable exceptions are Stockholm, London and Singapore. The key public concern is that while some people might benefit, others might lose from the pricing. Based on unique Swedish data, we measure to what extent this concern is justified. Moreover, we propose and investigate in field experiment an innovative road-pricing scheme with the cash-back component that might have both substantial public support and positive welfare effect.