1. Introduction
Road pricing policies are increasingly implemented in urbanised areas around the world. The
most important reason for implementing road pricing is to alleviate congestion and to increase
accessibility of urban regions. Additional motivations are the reduction of negative effects of
car traffic, such as noise nuisance, local air pollution, acidification and climate change, and
the generation of revenues, that can be used to build and maintain infrastructure.
Road-pricing policies are seen as a potentially promising measure to alleviate congestion
problems in several countries (Bovy, 2001; Bovy and Salomon, 1999). By means of road
pricing, travel costs are more directly linked to the use of the road. In the short run,
implementation of road pricing could lead to changes in route choice, departure time, the
choice of the mode of transport and in the frequency of travelling (May and Milne, 2000; TfL,
2003). In the longer term, relocation decisions, such as changes in residential or work
locations, may also occur (Banister, 2002). To properly assess the effects of road pricing, it is
important that relocation decisions are included. Relocations imply changes in car trip
patterns and car trip distances, which in turn have an effect on congestion levels and the
results of road pricing. On the other hand, relocations may imply that alternative modes
become more or less attractive, leading to mode changes, which also affect congestion.
Additionally changes in residential and work locations may also have an impact on the
housing market, such as for example the need for more or less houses at particular places
and/or changing housing prices.
In contrast to the more extensive (economic) literature on short term responses to road
pricing, the influence of road pricing on (re)location choices has received only limited
attention to date. Sometimes more long term elasticities implicitly take these location effects
into account, but then only partly because empirical data is often available for only a few
years after a price change. However, there are relevant studies in adjacent areas. A substantial
body of literature (e.g. Wingo, 1961; Alonso, 1964; Muth, 1969) describes the influence of
the traffic and transport system on residential and work locations. Some of this literature,
especially the older work, is based on the classical spatial micro-economic model developed
by Von Thünen in the nineteenth century, later (especially in the 1960’s) extended and refined
by other researchers such as Wingo, Alonso and Muth. A general criticism raised against
these micro-economic models is that the influence of transport costs in location decisions is