Economists propose use of dynamic road fees for traffic control

Posted: August 3, 2018 by oldbrew in Emissions, opinion, research, Travel

This appears to be based around the same technology as used in car insurance tracking devices. In effect every road would potentially be a toll road, with variable charges according to whatever factors are applied.

In the current issue of Nature, economists Peter Cramton, Axel Ockenfels (both University of Cologne) and R. Richard Geddes (Cornell University) propose having drivers pay a dynamic fee for the use of roads, reports Green Car Congress.

This would contribute to avoiding traffic jams and protecting the environment, the researchers argue.

Fees that respond to traffic volumes in real time and with site precision, taking into account factors such as vehicle type and exhaust emissions, can significantly improve traffic flow and contribute to reducing air pollution, they suggest.

The location of individual cars can now be tracked to within a few centimeters. This makes it feasible to measure and price road use in real time according to demand. If the price were set at the right level, enough car drivers would choose to drive at a different time or take a different route or mode of transport to cut congestion. Limited road space would be managed in a similar way to airfares, electricity, hotel rooms and train journeys. Uber already balances demand and supply of its cars through surge pricing.

Overall, dynamic pricing does not drive motorists away. It can double the capacity of a congested route in peak times by preventing traffic jams—just as managing fisheries can ease overfishing. Pollution and stress would decrease. The funds raised could be used to improve roads and public transport, and to reduce fuel and other taxes.

—Cramton et al.

The authors argue that fixed pricing schemes do little for congestion, because prices often do not change meaningfully with supply and demand. A low price does little to mitigate jams at peak times. “A price that is fixed high to eliminate peak congestion would be as inefficient and unacceptable as having Thanksgiving airfares all year.”

Traffic jams are not only annoying and time-consuming, they are also costly. In Germany, the economic damage caused by congested roads in 2017 totaled approximately €80 billion euros.

Currently, road users who cause traffic jams, damage the environment and even incur costs are paying just as much as those who are not involved. Without a toll, this means that the general public is subsidizing these road users. That’s unfair.

—Axel Ockenfels

A toll for road use would bring these costs to light and reduce congestion.

Continued here.

  1. MrGrimNasty says:

    More pie in the sky thinking from idiots in academia with no common sense. Private cars use the roads when they need to use the roads. Just like people use electricity when they need to use electricity. In both cases, the amount of that use that is flexible time-wise is a small fraction. Add in the impracticality of having to check the price of a journey before leaving and/or modify it in reaction to real time pricing updates – it’s just complete BS.

  2. Ian W says:

    This is a somewhat dated idea, the peages on the autoroutes in France already do this. However, there are points to consider. First, GPS is not necessarily as accurate as claimed. It is exceptionally easy to jam GPS and there are truckers in the US that already do this so their dispatch cannot tell where they are. GPS is not always accurate to centimeters and someone on a traffic free village road could see themselves charged for being on the congested motorway alongside. Secondly, the information on where everyone drives would be a major invasion of privacy that is probably contrary to the current data protection legislation but be very attractive to governments, businesses and thieves. Finally, it would work as a regressive tax, as those who can afford the tolls would take no notice and those that cannot would be forced off the roads. I am sure the rich would be impressed with a toll enforced politburo lane.

  3. JB says:

    Why is it that road maintenance is continually beset by increases in percentages? The state of Missouri has a bill present for increasing the tax rate on fuel yet again to cover road repair. The Kansas turnpike authority has managed to maintain the freeway for the last 20 yrs with less than a 10% increase. Their system is much simpler than the proposed one here, and I have not heard much complaint about it.

    Sounds more to me like they do not have an efficient system and the solution lies in a different direction than continually throwing money at it.

  4. p.g.sharrow says:

    The Bureaucratic object is not to fix the roads. The object is to collect MONEY, build larger bureaucracy empire, gain more control over the population by limiting their movements.
    In America the citizens have the Constitutional right “To free Use of the Public Road”. If public funds “Taxes”are spent on the road, it is a Public Road. “Free Use” as in, with out extra fees or bureaucratic permissions…pg

  5. A C Osborn says:

    And the cost of this little exercise in stupidity?

  6. oldbrew says:

    The technology to monitor vehicle use already exists and is used by some insurance companies, but on a voluntary basis. It can tell how fast people drive and how hard they brake, for example. Young drivers can get a discount providing they demonstrate ‘good behaviour’.

    How black box car insurance works

    The charging concept sounds a bit like a smart meter for cars but without the choice of tariffs :/

  7. cognog2 says:

    The naive beleif that motorists CHOOSE their routes and timings puts this article in the bin. The individual cost of getting involved in congestion is already high enough to provide more than adequate disincentive. Adding further to the cost and frustration will only create stress levels and increase the level of mental problems in society.

  8. oldbrew says:

    p.g. – the US had toll roads even before 1800

    But maybe there were alternative free routes?

  9. R Glover says:

    In the UK I think £0.8 of the cost of fuel per litre is tax. Much more than the tax on electricity at 5%. In addition to the one-off road tax the total tax paid using hydrocarbon fuels is mileage and efficiency dependent.

    The government will need to replace the revenue from fuel tax as the move to electric cars inevitably increases. It would be unacceptable to do this at source by raising electricity tax therefore we can expect some form of replacement tax based on the mileage covered. The problems of combining this with traffic management add another dimension that I believe will be difficult to implement fairly.

  10. oldbrew says:

    Finding out who is speeding, where and when could be reduced to a computer program output 😎

    Your monthly driving bill could have a time-of-day mileage component and a technical offences fee. Or if you’ve really overdone it, a summons 😦

  11. Dodgy Geezer says:

    Fees for using things mean that the authorities need no longer provide any extra services – they just suppress our use of the ones that we have…

  12. Adam Gallon says:

    Can’t have the poor cluttering up the countryside. Into the cities with them!

  13. oldbrew says:

    Adam – that’s mostly where the work is, so if you can’t afford to commute…

  14. ivan says:

    Adam, that is exactly the UN Agenda 21/30 objective. People in controlled cities with little or no direct contact with other cities, while the elites have very large country estates (the UN idea of utopia).

  15. p.g.sharrow says:

    @oldbrew; Early toll roads in America were private roads, no tax or public money was used to build or operate them. The provision in the American Constitution was created because the King required the locals to Construct and maintain the King’s Road and then they had to get permission and pay a fee to use the King’s Road. So that provision was installed to foreclose bureaucratic interfering and fee charging for the use of the Peoples Roads…pg

  16. oldbrew says:

    Then there’s Breezewood…

    Business Week stated in 1991 that Breezewood is “perhaps the purest example yet devised of the great American tourist trap…the Las Vegas of roadside strips, a blaze of neon in the middle of nowhere, a polyp on the nation’s interstate highway system.”,_Pennsylvania#Unusual_I-70_alignment

    NYT version…[click on headline for more]

  17. E.M.Smith says:

    @R. Glover:

    So have the electric cars present themselves once a month, or year, at the DMV and pay their road tax based on the odometer miles driven. No need to bother the rest of us.


    So given that it isn’t supposed to be done, how can we have places like L.A. and Houston where lanes of the Interstate have a toll fee applied?

    FWIW we already have “flexible” road use tolls in California. The latest fad is to convert exiting lanes of an Interstate or sometimes add a lane while converting some to tolls. As the day progresses, the toll goes from nothing in the dead of night (as nobody would use the lane anyway) to a peak charge at peak commute hours. Rich Folks can just breeze past the poor folks stuck in the few remaining “free” lanes… Cars use a small transponder to pay their charge / mile as they drive under overhead sensors.

    Florida uses a similar (but incompatible) sensor / transponder system as does Georgia (so at least 3 incompatible systems…). The Florida system also includes a license plate reader so if your transponder fails you still get billed; they intend to extend this to the point where a transponder is not needed at all.

    So far in my experience with these systems (in all four States – Calif., Florida, Georgia, Texas) they have not reduced congestion at all, and in many cases have made it much worse, in the “free” lanes. The toll lanes are typically wide open and moving fast; as folks can’t afford to pay $1 / mile to get to work or buy groceries… except for the rich and those on expense accounts… Congestion is typically made much worse in the cases where one lane is added to the “freeway” but then it and another are converted to tolls; thus reducing the freeway by a lane to add a 2 land toll road section.

    But the government revenue goes up considerably so don’t expect this process to slow down, even as it makes life worse for most of the drivers.

  18. p.g.sharrow says:

    In my experience with government observation of controlling law. Government officials are by law, “Mentally Incompetent” that is, by law they can not be personally held responsible for their actions. Add to that, when they violate controlling laws it is up to the citizens to control them and they have control of unlimited funding and the judicial system to protect themselves.
    The greatest failure of the founders is they believed that we would be dealing with honorable people in government. As Al Gore said “There is no controlling Authority” when he was asked about his violation of controlling laws while Vice President. OR as no one that will prosecute and punish, There is no Law Breaking. Hummmmm. seems to me that Comney said the same thing about Hillary Clinton.
    IIRC this toll road thing was hashed out in the 1930s and that is why the Bay Bridges are quasi-private entities. They replaced private ferries and part of their charters was when they were paid for they would revert to the Highway system, something that has not happened because the state does not want to be burdened with their maintenance.

    When I was head of a new small city planning commission, State and Federal lawyers came and explained what we could legally do and not do. And what we could as well as what we not get away with. Bottom line was, if you did not take a bribe, you could do anything you wanted with no risk and it was up to the citizen effected to stop you…The citizen was screwed even if they won…pg

  19. oldbrew says:

    ‘Economists’ might want to consider the benefits of better roads, instead of just trying to price people off the most used ones.

  20. cognog2 says:

    This proposal gives a strong motivation to the government to generate more congestion. NOT a sensible thing to do.
    All they need to do is to stick up a few cones and Bingo the money rolls in.

  21. oldbrew says:

    Pay per mile charges should be cancelled if it takes more than 2 minutes to do that mile due to congestion 😎

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