CONGETION TRADING is a totally new concept invented by myself，FAN Wen-bo. : ] I would like to explain it:
The overal goal of congestion trading is to reduce congestion by an efficient approach.
Congestion trading promotes usage of markets to determine how to deal with the problem of road congestion. This theme allows individuals or organizations to choose freely how or if they will reduce motor-mode travelling by purchasing or selling congestion allowances or credits in the market like any other commodities.
In a congestion trade system, organizations which do not travel and pollute by motor vehicles may also participate, thus the congetion credits can be purchased and retired and hence the price of the remainder would be driven up according to the law of demand.
In addition, urban traffic governments can implement 'cap control' in concert with congestion trading themes.
Theoretically, motor-vehicles'owners will choose the least-costly way to comply with the congestion regulation, creating incentives that reduce the cost of achieving a congestion reduction goal.
Moreover, congestion trading,in comparision with CONGETION PRICING, is with much more economic efficiency according to transaction cost theory. Thus, exsting congestion price or vehicle tax,even fuel tax can be replaced by congestion credits.
In fact, the basic idea of congestion trading is not original at all. One can find the spirit exactly in the modern economic innovation, EMISSION TRADING, which is widely applied aroun the world, including China, Hangzhou, for instance.
