A PRICING EXPERIMENT TO EVALUATE PRICE SENSITIVITY TO TOLL ROADS

Abstract

Transportation authorities and private owners and operators of toll facilities are often faced with the question of what price to charge. The objective of the toll pricing can be either to reduce congestion and environmental damage or to raise funds for infrastructures investment. The article presents the results of a pricing experiment conducted for the Teodoro Moscoso Toll Bridge in San Juan, Puerto Rico. The price experiment was conducted to assess the potential effectiveness of segmented pricing as a means of increasing revenues and to obtain information on price sensitivity. Under the assumption that people who use the bridge frequently (commuters) may have a higher price elasticity than those who use the bridge occasionally (business travelers, airport passengers), the frequent user market was offered discount tickets for use within a limited time period. The results of the experiment were monitored using several mechanisms: surveys, traffic counts, discount card sales, and usage. Of the more than 1,000 airport employees who drive over the bridge daily, only about 20% purchased discount tickets and the price reduction did not persuade any new users.

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