Economics Assignment: Impact and Analysis of London Congestion Charge

This economics assignment analyzes the London Congestion Charge implemented in 2003, focusing on its impact on different income groups within the region. The assignment explores the charge's effect on high-income earners, who are less affected, and lower-income earners, who may struggle with the daily fees. It examines the potential need for exemptions for low-paid and market workers, considering the financial burden of the charge and the cost of purchasing newer, less-polluting vehicles. The assignment references several academic papers to support its analysis, providing a comprehensive overview of the economic implications of the congestion charge, including discussions on its implications on travelling habits, public transport, and the overall economic landscape of the region.

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the Student
Name of the University
Author Note

1ECONOMICS ASSIGNMENT
Answer 5:
"Rich people will carry on paying---it'll have no effect on them."
The London Congestion Charge, which was implemented in 2003, for the vehicles
operating in the Congestion Charge Zones of the region, is currently amounted to 11.50 pounds
each day for those vehicles, which are of non-exempt vehicles. For non-payment a penalty of 65
to 195 pounds is imposed on the defaulter. This charge though seems moderately high for daily
travelling, is not expected to affect the rich people of the country. The people falling in the
uppermost income sector of the country, consisting of the upper ten percent of total population of
the country, in terms of income, is seen to have an average income of 107,937 pounds. This in
comparison to the bottom ten percent is huge as their average income is nearly 4,436 pounds
(Dudley, 2013).
Therefore, it is not a big deal for the richest section of the country to spend 11.50 pounds
daily for their travelling purposes and the charge would not affect them significantly. They can
also afford to buy all-electric cars, which are completely exempted. However, the upper middle
class people of the region, though can afford the charge, will not be happily agreeing to pay the
same and there will be some implications of the charge on their travelling habits (Givoni, 2012).

2ECONOMICS ASSIGNMENT
Answer 7:
"There should be an exemption for low paid and market workers."
According to the currently existing rates in the Congestion Charge system in London, the
non-exempted vehicles are charged an amount of 11.50 pounds daily for travelling in the
Congestion Charge Zone. In addition to this the older vehicles, which contribute more to the
pollution of the environment, under the rule, has to pay an extra amount of ten pounds over the
usual charge of 11.50 pounds for traveling in the Congestion Charge Zone in this region (Zheng
et al., 2014) .
This is expected to be hurting for those low paid and usual market workers who need to
travel in this region every day to earn their daily breads. Many of them use old cars and it may be
too costly for them to buy new and less polluting vehicles to get exemptions. On the other hand,
they may try to avail public transports in order to avoid paying the congestion charge. However,
this on the other hand increases the congestion in the public transport and their availability may
become a problem itself. Paying 11.50 pounds everyday can also be taxing on these low paid
workers. In this context, exemptions or at least lower charges for these workers can be beneficial
for them (Fan, 2015).

3ECONOMICS ASSIGNMENT
References
Dudley, G. (2013). Why do ideas succeed and fail over time? The role of narratives in policy
windows and the case of the London congestion charge. Journal of European Public
Policy, 20(8), 1139-1156.
Fan, W. (2015). Optimal congestion pricing toll design for revenue maximization:
comprehensive numerical results and implications. Canadian Journal of Civil
Engineering, 42(8), 544-551.
Givoni, M. (2012). Re-assessing the results of the London congestion charging scheme. Urban
Studies, 49(5), 1089-1105.
Zheng, Z., Liu, Z., Liu, C., & Shiwakoti, N. (2014). Understanding public response to a
congestion charge: A random-effects ordered logit approach. Transportation Research
Part A: Policy and Practice, 70, 117-134.

4ECONOMICS ASSIGNMENT