Congestion Pricing

You catch a cold. You buy cough syrup. That was $5 plus tax to clear up your congestion.

That’s...not what we’re talking about here.

Congestion pricing is a different animal in business. It has everything to do with the consumption of a service in periods of high demand.

Think Uber: The company uses something called surge pricing (much to the chagrin of its users). When demand for rides runs high, prices increase. Apply this concept generally, and you get congestion pricing.

Congestion pricing comes in when utilities or public transportation increase prices during times of peak use. The idea is to discourage people from using the service during these times of high demand. People now have incentives to rework their schedules. If they can, these consumers won't ride the bus, or the subway, or the metro, or use electricity (or whatever else is getting the congestion pricing treatment) in periods of high demand.

Example:

The city of London charges a fee for vehicles driving into the so-called Congestion Charge Zone during the workday (weekdays from 7 AM to 6 PM). The fee first came about in 2003, and the charge (as of 2018) amounts to about £11.50 per day. Of course, you’re probably wondering why their Dollar Sign is a little letter L with a line through it. We may never know.