Crowding

Crowding is a common disamenity, yet little is known about its monetary cost. We estimate the willingness to pay (WTP) to avoid crowding in public transit with a revealed-preference approach. Beijing Subway passengers choose departure times, trading off fare, in-train crowding, and schedule deviation, with price variation from an early-bird discount. Leveraging the subway’s network structure, we impute real-time in-train crowding, infer each passenger’s optimal arrival time, and construct a novel instrumental variable for crowding. The marginal WTP to reduce crowding by one passenger per square meter is about 0.05 RMB per minute, implying a crowding externality exceeding the fare. High-income passengers have higher crowding WTP but are less price-sensitive. An optimal crowding tax improves welfare but is regressive; a two-class configuration elicits self-selection and benefits both high and low income commuters.