Toll Pricing “Futures” Market Could Reduce Congestion and Increase Revenue

Nicholas PhD Fournier, Anthony PhD Patire and Alexander Skabardonis

Institute of Transportation Studies, Research Reports, Working Papers, Proceedings from Institute of Transportation Studies, UC Berkeley

Abstract: Transportation agencies are increasingly relying on tolls to raise revenue and to mitigate congestion, but conventional fixed tolls do not necessarily encourage offpeak use of infrastructure, and high tolls can dampen economic productivity. Dynamically adjusting pricing based on demand can incentivize travelers to avoid peak traffic periods and shift it to other modes, but given the unpredictable nature of traffic, travelers lack the information necessary to accurately predict congestion, so dynamic pricing has minimal effect on demand. Dynamic toll pricing also poses equity concerns for those who lack other travel options, such as access to transit. A simple “futures market” pricing mechanism has the potential to address these concerns—travelers can lock in a price for expected trips by prepaying for future tolls, with the future price increasing as more travelers book an overlapping time slot. To evaluate the effectiveness of a futures market to impact travel demand, trip density, traffic flow, and revenue, this research conducted a sensitivity analysis of elasticity and pricing constraints.

Keywords: Engineering (search for similar items in EconPapers)
Date: 2024-04-01
New Economics Papers: this item is included in nep-tre and nep-ure
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