Reference no: EM132482074

San Francisco, among other cities, is examining congestion pricing as a way to reduce traffic congestion that has been successfully used in European and Asian cities. In London, for example, drivers were initially charged an $8 fee that has since increased to $14 every time they enter London's central business district. Before the congestion fee was implemented, traffic congestion was a major problem in central London. The effect of the congestion fee was to reduce traffic congestion by nearly a third in three years, as measured by traffic speeds. Traffic speed has nearly doubled from about 5 mph during business and rush hours to about 10 mph as a result of a decrease in the number of motor vehicles entering central London. Use of public transportation into the area increased significantly after the fee went into effect.

QUESTION: Does the decrease in the number of vehicles entering central London represent a decrease in demand or a decrease in quantity demanded for the use of central London's streets?