The Impact of Congestion Pricing Plan on the Value of Residential Properties: Evidence from Tehran

Abstract

Effective urban policies contribute to new equilibrium patterns, improving environmental amenities and reducing traffic congestion. Nevertheless, residents may find certain urban policies limiting. Thus, it is crucial to evaluate their impacts on different urban outcomes. We use a disaggregated dataset of transacted residential buildings during two events of pricing and unpricing in Tehran and employ the Difference-in-Difference methodology to find the causal effects of these policies on residential housing values. Findings indicate that pricing reduces the housing value by about 7%, while unpricing increases it. Our study contributes to the literature by providing evidence that urban policies may considerably change the valuation patterns of different areas. This work also cautions policymakers in cities dealing with debates over zoning, such as New York and San Francisco, while considering of the impact of different cities’ heterogeneous features.