Due to the growing volume of traffic, average traffic speeds i n London have fallen over the last 20 years (Box 6.1) after having been stable for most of the century. It is clear to just about everyone that the current practice of permitting open access to the roads network is extremely wasteful. Goods whose delivery is urgent, or people whose time is valuable, are delayed by drivers on relatively un important trips. One possible response to congestion is to advocate road pricing. This chapter explains the theory underlying road pricing. The basic idea is that by charging all users of the road a fee equal to the marginal congestion costs which they impose on other road users, congestion costs are reduced. This occurs partly by dissuading those whose journeys are relatively unimportant from travelling by private car and partly by encouraging them to reschedule their journeys away from peak times.