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Saturday, February 10, 2007

Daniel Gross: Congestion Pricing

Daniel Gross discusses the increasing reliance on congestion pricing to relieve commuting and other problems:

What’s the Toll? It Depends on the Time of Day, by Daniel Gross, Economic View, NY Times: ...Congestion pricing — the concept of charging higher fees to consumers for a good or a service at times of heavy use — is well established in businesses like hotels, long-distance phone service and air travel. And while London and Stockholm have successfully enacted plans that levy fees on drivers who want to enter traffic-clogged city streets, the United States has been slow to apply the concept...

Since February 2003, when London introduced a system that charged a fee to motorists entering the central city on weekdays, “congestion has been reduced noticeably,” said Edward L. Glaeser, professor of economics at Harvard...

Every time a driver turns onto the Henry Hudson Parkway, she slows down the travel speed of all the other drivers, imposing a cost — or, as economists say, a negative externality — on countless fellow citizens. ...

But so far, high gas prices and concerns about emissions haven’t led Americans to alter their driving patterns significantly. By making people take into account the true cost of driving — beyond gasoline, insurance and lease payments — congestion pricing in theory encourages people to car-pool, or to drive at different times of the day, or to take the train or bus.

There are a few congestion-pricing experiments in the United States today. On a portion of California Route 91, in Orange County, drivers can choose between the free road and the less-traveled pay-per-drive adjacent lanes, in which tolls vary... To the south, in San Diego, on an eight-mile stretch of Interstate 15, high-occupancy toll, or H.O.T., lanes can be used by individual motorists willing to pay fees that vary throughout the day, depending on traffic conditions.

Some number of travelers will always be willing to pay a price to save several minutes, while others would rather save a few dollars and take the chance of being stuck in traffic. “People are willing to pay for that time savings, and the price can be adjusted in such a way that you keep the lanes pretty full but don’t become overloaded,” said Kenneth Small, research professor of economics at the University of California, Irvine. “You can almost always drive in the express lanes without slowing down, free flow.” In San Diego, the price of using the H.O.T. lanes can change every six minutes.

The greater willingness of drivers and policy makers to consider congestion pricing is a recognition that building more roads will never be a solution to traffic problems. “In many areas, it’s extremely hard to find places to expand capacity,” said Clifford Winston, an economist at the Brookings Institution...

Today, variations of congestion pricing are in effect on stretches of highway in Houston, Minneapolis and Denver. The success of experiments and the new funding lead advocates like Mr. Winston to conclude that “these H.O.T. lanes are just the tip of the iceberg.”

There's reason to think that we could be entering a golden age for congestion pricing. The transportation secretary, Mary E. Peters, is an advocate of the practice. ...[T]he Bush administration has signaled support for legislation that would use congestion pricing to encourage airlines to spread their flights more evenly throughout the day. What’s more, the technology that enables operators of complex systems to adjust prices can facilitate congestion pricing in electricity and parking meters.

But introducing congestion pricing on a wider scale will mean overcoming powerful cultural and psychological obstacles. “Everyone accepts that if your car is stationary, it’s fine to pay for parking,” said Alexander Tabarrok, professor of economics at George Mason University. “But if you tell people they have to pay to move their car between two points, they think it’s crazy.”

The notion of charging people for a good or service generally regarded as free — driving on highways — also instills political opposition. In New York, many elected officials argued that charging fees to drivers would be a burden for poor and middle-income people.

Professor Glaeser disagrees. “The greatest beneficiaries of reduced congestion on roads in New York would be people who ride buses to get to and from work, who would find their commutes shortened.”

    Posted by on Saturday, February 10, 2007 at 06:03 PM in Economics | Permalink  TrackBack (0)  Comments (10)


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