09 July 2007
Electronic tolls lead to higher tolls
Patrick Crozier
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ERP in Singapore

The idea is abroad (via Marginal Revolution) that electronic road pricing (ERP) leads to higher tolls.  Bearing in mind London’s experience it would appear that you don’t the electronic bit.

Marginal Revolution suggests greedy government.  Mark Thoma suggests that, hey, with ERP roads are a better product so people are prepared to pay more for them.  A commenter on the post suggests that it’s actually all to do with our inadequacies as human beings - because with ERP you pay later you tend not to notice so much. 

I’m a bit worried about that last one.  If true it suggests that prices are not all that good as signals.  Which kind of undermines free market theory - or, at least, that bit of the theory that explains why markets work.

Feedback

  1. I’ll agree that deferred payments, or aggregated payments, do allow increases in tolls collected.  But they also save time for road users and they increase the value of the roadway experience.  Plus, we’re talking about the government or other state-sanctioned corporations, which are always after as much as they can get, but still never have enough.

    I tend to think that road prices aren’t high enough in general.  I’d like to see much closer to income / outflow parity among roadway funding / spending.  Because that would be a good goal in itself, and because I’m tired of it being a pathway for bashing of automobile ‘culture’.  I’d also like to see congestion pricing (at least in the US) actually have some impact on congestion, instead of being just an after the fact kind of thing.

    I do think that attempts to abuse the practice, raising tolls too high, will deter people from using roads.  In that, it does still act as a signaling mechanism.  It will just act over a longer time frame.  It’s also a bit like gas prices.  People bitch and moan, but do they actually stop using gas?  Not so much.

    Posted by Highway on  09 July 2007 at 07:07 am

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