Can Tolling Help Everyone? Estimating the Aggregate and Distributional Consequences of Congestion Pricing

Economists have long advocated road pricing as an efficiency-enhancing solution to traffic congestion, yet it has rarely been implemented because it is thought to create losers as well as winners. This paper uses survey and travel time data, combined with a structural model of traffic congestion, to estimate the joint distribution of agent preferences and evaluate the aggregate and distributional effects of road pricing. I find that adding tolls on half of the lanes of a highway yields a Pareto improvement. Further, the social welfare gains from doing so are substantial --- up to $1,740 per road user per year