Arnold Kling

The Case for Toll Roads

Arnold Kling, Great Questions of Economics
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Traffic congestion is a classic example of market failure. By taking a shopping trip at 5 PM, I add to the cost of other people's traveling. Jerry Taylor and Peter Van Doren argue that the best solution would be a toll road where the toll varies based on time of day.

Advances in technology make this a viable strategy, allowing us to collect tolls without the burden of toll plazas and gates that can bottleneck traffic. The tolls would vary according to the time of day to ensure that the lanes remain uncongested at all times. Such a system is in use on State Route 91 in Orange County, Calif.

In economics, charging a high price when capacity is under stress is known as "peak load pricing." What Taylro and Van Doren are arguing is that peak load pricing is feasible for roads, and that it would help alleviate traffic congestion.

Discussion Question. Even if people were aware that peak load pricing is technically feasible for roads, what political objections would they raise?

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