Congestion Pricing and Demand Management: A Discussion of the Issues
McMullen, B. Starr, Policy Studies Journal
This article reviews the political, technological, and economic issues involved in the formulation of congestion pricing policy. Increased urban congestion combined with increasingly scarce resources is making policymakers consider congestion pricing as an alternative to expanding highway capacity. Past experiences with congestion pricing and other types of demand management are discussed in an attempt to identify problems policymakers may expect to encounter in the U.S.
Increasing congestion in metropolitan areas have become an important concern to policymakers in recent years. Not only are commuters struck in traffic for longer periods of time at rush hour, but traffic congestion is seem as a contributor to declining air quality. These include high occupancy vehicle (HOV) lanes, elimination of employer- subsidized parking, imposition of higher downtown parking fees, implementation of flextime work schedules, and implementation of congestion pricing for peak hour commutes.
Of these policies, congestion pricing is the one that probably has the greatest potential for reducing congestion. Until recent years, however, it has not been seriously considered due to a combination of technological and political factors. The seriousness of the congestion problem, and the failure of other demand management policies, has renewed interest in congestion pricing. Further, the technological impediments are no longer significant problems. The remainder of this paper explains how congestion pricing works, why other congestion policies will probably be less effective, and what obstacles remain before congestion pricing can be successfully implemented.
Economists have long advocated marginal cost pricing to allocate scarce highway capaicity, especially under congested road conditions (Morrison, 1986; Borins, 1988; Hau, 1990). Congestion pricing involves charging higher road prices during peak hours when traffic volume exceeds road capacity. If road users were made to pay the full marginal social cost of using the highways, urban geography and commuting patterns would be different from what they are today (Newberry, 1990). Further, there would be less congestion if users were made to pay the marginal cost of highway use.
Until recently, congestion pricing has been viewed as impractical due to technological and political factors. Engineering advances such as the development and successful testing of extremely accurate automatic vehicle identification systems (AVI) have significantly reduced the technical barriers to congestion pricing. The political environmentn still remains a substantial obstacle, although policymakers are beginning to view congestion pricing as a viable policy alternative. The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) specifically instructs the Federal Highway Administration (FHWA) to initiate five congestion pricing plot projects using $25 million of FHWA's administrative funds for each of the 1992-1997 fiscal years.
Recent attention at the federal and state levels derives from a coalition of interests representing both highway and energy concerns. State and federal highway departments are interested in ways to allocate existing road space to reduce congestion without actually expanding highway capacity. Departments of energy are concerned with reducing both excess energy consumption and pollution created by a congested highway system. The result has been advocacy of a variety of "demand management" programs designed specifically to relieve demand at peak hours and redistribute highway use throughout the day (Orski, 1990). Congestion pricing is perhaps the most controversial and potentially powerful of these demand management policies.
The purpose of this paper is to present and discuss the major issues surrounding congestion pricing. The first section provides a brief theoretical discussion of congestion pricing and an …
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Publication information: Article title: Congestion Pricing and Demand Management: A Discussion of the Issues. Contributors: McMullen, B. Starr - Author. Journal title: Policy Studies Journal. Volume: 21. Issue: 2 Publication date: Summer 1993. Page number: 285+. © 1999 Policy Studies Organization. COPYRIGHT 1993 Gale Group.
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