The Pricing Answer to Traffic Congestion

Traffic congestion present several tricky problems of analysis. One is that the amount of traffic on the road at a peak travel time is not fixed. As Anthony Downs in his mini-classic 1992 book, Stuck in Traffic. at least some of the travelers who are confronted by congestion will shift their patterns in one of three ways: they will shift the timing of their trip earlier or later, shift the route of their trip (say, from highways to surface roads), and shift the mode of their trip (say, from a single car to mass transit or a carpool). Conversely, when attempts are made to reduce traffic congestion by building more lanes of highway, one result will be that a certain number of those who had previously shifted their timing or route or mode of travel will now shift back to becoming drivers of single-passenger cars, and the gain in reducing congestion will be frustratingly smaller than might have been predicted.

There is certainly a role for a range of technical fixes to traffic problems: more highways, mass transit, coordinating traffic lights, signs warning of congestion, and maybe someday autonomous vehicles platooning in coordinated groups. But ultimately, putting a price on travel during peak-level congested times needs to be part of the answer, too. Brian D. Taylor (no relation) offers a short essay on the subject in "Traffic Congestion Is Counter-Intuitive, and Fixable," ACCESS Magazine, Spring 2017. He writes:

"There are five major views on how to best manage traffic congestion. One view focuses on adding road capacity: wider streets, new traffic lanes, left- and right-turn lanes, more parking, and even new freeways — all of which cost a lot of money. A second view favors putting roads on “diets” and adding capacity elsewhere: improved bus service, more bike lanes, increased building densities to encourage walking, and new rail transit lines — the last of which also costs a lot of money. A third and more cost-conscious view focuses on better management of our existing transportation systems: coordinated signal timing for cars, signal pre-emption for buses, remote coordination of bus and train operations, and freeway service patrols all aim to make our transportation systems operate more effectively. A fourth view is that technology will save the day: traffic-sensitive navigation systems, increasing use of services like Lyft and Uber, and, eventually, fully autonomous vehicles that reduce the need for parking and use road capacity more efficiently. The fifth view is perhaps most favored by transportation experts, but is also generally reviled by the traveling public and the officials they elect: using prices to balance the supply of and demand for travel. ...

[W]hen traffic is crawling along at rush hour, fewer vehicles are getting through than at other times, not more. A typical freeway lane can handle up to 2,000 vehicles per lane per hour, but in really bad traffic that throughput can be cut in half; just when we need the most out of our road system, it performs at its worst. So heavy traffic is not only irritating, it’s also really inefficient. ...

"Road pricing is expanding around the globe. In the US, Los Angeles, Orange County, San Diego, Houston, Minneapolis, and a growing list of other cities have high-occupancy toll (HOT) lanes. The prices on these lanes vary based on congestion levels in the parallel “free” lanes in order to keep traffic flowing smoothly in the toll lanes. The Orange County 91 Express Lanes celebrated their 20th anniversary in 2016, and over 600,000 travelers in Los Angeles have accounts to use the I-110 and I-10 ExpressLanes. The revenues generated have helped to pay for improved public transit service in the ExpressLanes corridors. ...

"Outside the US, London, Milan, Singapore, Stockholm, and several other cities now charge drivers who enter their congested central areas. Chronic bumper-to-bumper traffic disappeared virtually overnight after the charges were introduced in each of these places. Buses now travel much faster and more reliably, the streets are more pleasant for walking and biking, and those who want to pay to drive can do so with few delays. In Stockholm, public support for the central area (or cordon) pricing increased after people saw how well it worked."

The economics of traffic congestion is clear-cut. Those stuck in traffic naturally prefer to think of congestion as caused by everyone else, but everyone in the jam is part of the problem.When you are in a traffic jam, those in front of you in line are imposing costs of time delay on you, and in turn, you are imposing costs of time delay on all of those behind you in line. Those costs are a form of pollution, a "negative externality" as economists call it.   If drivers were required by road pricing to pay these peak-load costs that they impose on others when the roads are congested, many of them would find a way to shift the time or route or mode of their commute, or to telecommute at certain times.