Comments on: Peak Road Pricing http://www.coyoteblog.com/coyote_blog/2005/11/peak_road_prici.html Dispatches from a Small Business Sun, 12 Feb 2012 09:39:47 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Jonathan http://www.coyoteblog.com/coyote_blog/2005/11/peak_road_prici.html/comment-page-1#comment-2037 Jonathan Tue, 08 Nov 2005 20:53:37 +0000 http://coyote-blog.com/wordpress/2005/11/peak_road_prici.html#comment-2037 <p>If pricing works for one class of asset (HOV-lane access) why not apply it to others (the entire road)? A problem with using formal auctions to ration HOV-lane access is that people whose time is on average worth less than that of the successful bidders in the HOV-lane-access auction are still stuck waiting. Sure, they benefit to some degree as HOV-lane use increases, but there is still going to be congestion because most of the road isn't priced. Another problem with pricing schemes like yours is that they rely on long-term subscriptions that are inherently unable to handle varying marginal costs optimally. Obviously the marginal costs and benefits of road usage for different users vary by time and occasion. For example, there are times when people who would usually pay little for road access are willing to pay much more. </p> <p>Perhaps a better system would price by lane no matter who is driving. This could probably be arranged with transponders, and prices could be set automatically via algorithms based on traffic speed and cars per lane per unit of distance. Motorists would get current prices from electronic billboards and could adjust their behavior accordingly.</p> <p>In any event, my hunch is that the HOV model is not well suited to modern road-pricing schemes and might be better abandoned. Of course, getting transportation bureaucrats to do that is another issue.<br /> </p> If pricing works for one class of asset (HOV-lane access) why not apply it to others (the entire road)? A problem with using formal auctions to ration HOV-lane access is that people whose time is on average worth less than that of the successful bidders in the HOV-lane-access auction are still stuck waiting. Sure, they benefit to some degree as HOV-lane use increases, but there is still going to be congestion because most of the road isn’t priced. Another problem with pricing schemes like yours is that they rely on long-term subscriptions that are inherently unable to handle varying marginal costs optimally. Obviously the marginal costs and benefits of road usage for different users vary by time and occasion. For example, there are times when people who would usually pay little for road access are willing to pay much more.

Perhaps a better system would price by lane no matter who is driving. This could probably be arranged with transponders, and prices could be set automatically via algorithms based on traffic speed and cars per lane per unit of distance. Motorists would get current prices from electronic billboards and could adjust their behavior accordingly.

In any event, my hunch is that the HOV model is not well suited to modern road-pricing schemes and might be better abandoned. Of course, getting transportation bureaucrats to do that is another issue.

]]> By: Doug http://www.coyoteblog.com/coyote_blog/2005/11/peak_road_prici.html/comment-page-1#comment-2036 Doug Tue, 08 Nov 2005 05:04:47 +0000 http://coyote-blog.com/wordpress/2005/11/peak_road_prici.html#comment-2036 <p>Also interesting is that the construction of the toll lanes is being paid for by a private company, in exchange for a portion of toll revenue. No tax dollars at work!</p> Also interesting is that the construction of the toll lanes is being paid for by a private company, in exchange for a portion of toll revenue. No tax dollars at work!

]]> By: Max Lybbert http://www.coyoteblog.com/coyote_blog/2005/11/peak_road_prici.html/comment-page-1#comment-2035 Max Lybbert Mon, 07 Nov 2005 20:12:31 +0000 http://coyote-blog.com/wordpress/2005/11/peak_road_prici.html#comment-2035 <p>I remember when FasTrac(?) was introduced in Southern California. IIRC, there isn't a Dutch auction, just a set price to pay for the electronic device that permits you to ue the toll lanes. Then, if you're car is loaded enough, you can use the lanes for free. Otherwise you pay a toll that is calculated at different time of day to be higher than most people would want to pay, specifically to keep the lanes pretty clear of traffic.</p> <p>It appears to work. Unfortunately for me, I've never been in the targetted market (i.e., I'm not one of those people able to pay for a faster ride). Of course, the state continues to tell everybody, "by moving those guys into the other lanes, it makes your commute faster too."</p> <p>I support the idea, even if I don't get a faster commute. OTOH, in California, some people consider it a handout to the rich, even though the rich have to pay for it.</p> <p>Only in California can people get away with talking about an expensive handout to the rich.</p> I remember when FasTrac(?) was introduced in Southern California. IIRC, there isn’t a Dutch auction, just a set price to pay for the electronic device that permits you to ue the toll lanes. Then, if you’re car is loaded enough, you can use the lanes for free. Otherwise you pay a toll that is calculated at different time of day to be higher than most people would want to pay, specifically to keep the lanes pretty clear of traffic.

It appears to work. Unfortunately for me, I’ve never been in the targetted market (i.e., I’m not one of those people able to pay for a faster ride). Of course, the state continues to tell everybody, “by moving those guys into the other lanes, it makes your commute faster too.”

I support the idea, even if I don’t get a faster commute. OTOH, in California, some people consider it a handout to the rich, even though the rich have to pay for it.

Only in California can people get away with talking about an expensive handout to the rich.

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