Sunday, December 31, 2006

Congestion Pricing

From the Washington Post:

Maryland and Virginia are moving ahead with a form of congestion pricing on the Beltway and Interstate 95. In exchange for building additional lanes, contractors will be allowed to collect tolls that will vary by the minute. When traffic is heavy, the price will rise to whatever level is needed to keep the express lanes flowing. When demand is low -- presumably at times when traffic is flowing smoothly in the normal lanes -- the price will fall to near zero.

MP: Almost any time you observe congestion (excess demand), it's a sure indication that market pricing is not being used. And, to relieve or eliminate congestion, just implement market pricing and the congestion disappears.

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