Large Elasticity at Introduction

Lewis J. Lehe, Saipraneeth Devunuri

Research output: Contribution to journalArticlepeer-review


For tolling in urban areas, the measured elasticity of demand with respect to money cost is much larger when tolls are introduced than when tolls are raised. This paper names this phenomenon “Large Elasticity at Introduction” (LEI). It has been observed in four of five cities with urban tolls: London, Singapore, Stockholm and Gothenburg. After describing these cities’ experiences, the paper discusses why LEI is surprising from a modeling perspective, and then discusses and formalizes three plausible explanations for LEI: (i) transaction costs; (ii) the “zero-price effect”; and (iii) the “price-sensitive users” theory proposed by Börjesson and Kristoffersson (2018).

Original languageEnglish (US)
Article number101116
JournalResearch in Transportation Economics
StatePublished - Nov 2022


  • Congestion pricing
  • Tolls
  • Zero-price effect

ASJC Scopus subject areas

  • Transportation
  • Economics, Econometrics and Finance (miscellaneous)


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