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Congestion Pricing

Paper Session

Sunday, Jan. 5, 2025 10:15 AM - 12:15 PM (PST)

Hilton San Francisco Union Square, Union Square 6
Hosted By: Transportation and Public Utilities Group
  • Chair: Jonathan Hall, University of Alabama

Value Pricing or Lexus Lanes? The Distributional Effects of Dynamic Tolling

Cody Cook
,
Stanford University
Pearl Z. Li
,
Federal Trade Commission

Abstract

This paper examines the welfare and distributional effects of dynamically priced highway toll lanes. To quantify the equilibrium effects of tolling, the authors develop and estimate a model of driver demand, road technology, and the pricing algorithm. The demand model accounts for heterogeneous drivers choosing when and where to drive, as well as uncertainty about prices and travel times. A key welfare channel is the option value of tolling, where even infrequent users of the priced lanes benefit from the option to pay for speed. The model is estimated using data on toll transactions, historical traffic conditions, and driver characteristics from the I-405 Express Toll Lanes in Washington State. Compared to a scenario where all lanes are free, the current tolling system increases aggregate welfare and benefits drivers across all income quartiles, largely due to the option value. Notably, drivers in the bottom income quartile gain the most from the status-quo tolling system, as they have longer commutes, lower prices relative to time savings, and higher option values due to greater price sensitivity. Finally, the study demonstrates how simple revisions to the pricing algorithm can further enhance aggregate welfare and achieve redistributive goals.

Can Usage-Based Pricing Reduce Traffic Congestion?

Itai Ater
,
Tel Aviv University
Adi Shany
,
Tel Aviv University
Brad Ross
,
Stanford
Eray Turkel
,
Google
Shoshana Vasserman
,
Stanford and NBER

Abstract

This paper analyzes the effects of the largest field experiment to date that incentivizes drivers to limit driving during peak hours and congested areas via usage-based congestion pricing. The experiment monitored the driving behavior of 10,000 Israeli drivers recruited throughout 2020. For the first six months, participants' driving behavior was monitored and recorded; afterwards, they received an annual budget and were charged for each kilometer driven during historically congested times in congested areas, with any remaining budget paid out to them a year later. Using comprehensive data from 2020 and 2021, the study evaluates how this pricing affects driving behavior. The staggered recruitment of drivers facilitates identifying treatment effects through a difference-in-differences approach. The results show that drivers reduce their congested driving by approximately 10%, impacting both the decision to take a trip (extensive margin) and the timing and route of trips (intensive margin). There is significant heterogeneity in treatment effects, predictable by pre-treatment driving behavior, with the most affected drivers being those who contributed more to congestion and had more flexibility and access to public transit, without being disproportionately socioeconomically advantaged or disadvantaged. Finally, using one year of high-frequency traffic sensor data, the study estimates that traffic density affects traffic speed on Israel's largest highway and translates the treatment effects on driving behavior into increases in traffic speeds of up to 30% during the most congested times of day.

The Political Economy of Congestion Pricing: Evidence from New York Voters

Natalie Yang
,
Columbia University

Abstract

How do voters form opinions on congestion pricing? Using a panel of three surveys waves, this project leverages the upcoming introduction of congestion pricing in New York City to investigate how beliefs and opinions on congestion pricing evolve over time. Preliminary analysis of results from the pre-policy surveys of New Yorkers suggest that voters are not ``self-interested,’’ in the sense that their support for the policy is not a pure function of their anticipated personal gains or losses. Rather, political party and sense of “fairness” are much stronger predictors of support. Future work with post-policy surveys will be used to see whether and how voter update their beliefs and opinions after the implementation of the policy.

Highways or Greenways: The Impact of Congestion Pricing on Urban Transport Emissions in the United States

Misak Avetisyan
,
Texas Tech University
Ali Jaffri
,
Texas Tech University

Abstract

In this study we explore the potential impacts of congestion pricing on transportation emissions within the major metropolitan cities in the United States. The application of congestion pricing is modeled as an exogenous economic shock that stimulates changes in the consumer and producer behavior. This is intended to have noticeable repercussions for the traffic flow and emissions from road transport. In this paper we consider several scenarios to investigate the array of potential outcomes focusing on vehicle usage, shift to other transportation means, economic implications, and environmental gains. The results of this study indicate a significant reduction in urban transport emissions especially when shifts to less emission intensive transport means are considered. Our findings show that congestion pricing is an efficient means aimed at mitigating the deleterious effect of greenhouse gas emissions and it can be an important steppingstone for sustainable urban planning. This study will also give policy makers evidence for employing market-based instruments to improve the environmental quality in the United States. The results will not only draw attention to the environmental gains from such a pricing strategy but will also delve into the broader socio-economic dimensions of implementing transport congestion pricing in diverse urban landscapes.

Discussant(s)
Gabriel Kreindler
,
Harvard
Isis Durrmeyer
,
Toulouse School of Economics
Stefano Carattini
,
Georgia State University
Alex Anas
,
SUNY-Buffalo
JEL Classifications
  • R4 - Transportation Economics