UNDERSTANDING THE COMPETING SHORT-RUN OBJECTIVES OF PEAK PERIOD ROAD PRICING

Abstract

The interest in peak period road pricing has grown considerably in recent years both in the United States and abroad. This increase in interest is usually attributed to worsening congestion and improved electronic toll collection technologies. However, there may be a third reason as well: peak period pricing can be used to generate revenues. This use of peak period road pricing is explored and compared with programs that are designed to minimize social cost. Using some simple examples, it is shown that it is possible to increase toll revenues but at a significant cost to society. In addition, it is shown that most of the revenues and costs can be attributed to the length and end of the toll period.

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