Wednesday, January 11, 2012

Dynamic Market Pricing Reduces Congestion on the 520 Bridge, With Maybe Some Help from an App?

In early December, a CD post featured a Seattle-based company called Seabalt Solutions, which developed an app called Toll Avoider to help drivers avoid the new dynamically-priced tolls on the Highway 520 bridge that started in late December. 

After just a few weeks following the implementation of the bridge tolls, the Seattle Times is reporting that:

"New tolls on the Highway 520 bridge have reduced traffic so much that drivers are commonly traveling at 65 mph, maybe three times as fast as they're used to. Bryan Bucklin, of Seattle, estimates that his former 35- to 40-minute ride from Microsoft to Montlake is now as short as 15 minutes.

Motorists are diverting to other roads, chiefly the toll-free Interstate 90 bridge."
 
MP: Maybe the mobile app, in addition to the dynamic pricing, is contributing to the reduction in traffic on the 520 bridge?
 
HT: Greg Mankiw

103 Comments:

At 1/11/2012 10:29 AM, Blogger morganovich said...

i'd be interested to see what has happened to traffic on the i90 bridge.

just moving the jam from one bridge to another would not be much of a success story.

 
At 1/11/2012 10:35 AM, Blogger Methinks said...

I don't know about that, Morganovich.

Even if the other bridge is more congested, drivers are still better off.

They now have the option to pay up for a faster ride or to sit in traffic for a lower pecuniary cost.

Options are valuable :)

 
At 1/11/2012 10:39 AM, Blogger AIG said...

I live in Seattle (unfortunately), and the problem with congestion in Seattle simply comes out of incredibly poor road access, and unexplainable restrictions on those roads.

Sure dynamic pricing etc are all great ideas that should be implemented. but if they are implemented on top of a system that is broken, they won't achieve the ultimate aim of easing congestion.

The problem with Seattle is...hippies. There is a limited number of highways coming in and out of the city. That in itself is poor planning; its all centralized with a single failure point.

Of course, hippies here spend the money on building light rail systems that go absolutely nowhere, take far longer to get anywhere, and no one ever uses.

Then we have the restrictions. 1 highway lane is typically taken up by as a HOV lane. 30% of the available road is typically wasted away, for inexplicable reasons, and at the time when it is needed the most (rush hour when most people commute alone). Then they put speed limits which are ridiculously low, and most drivers here are so atrocious that they typically go about 5 mph...below...the speed limit, regardless of traffic conditions.

Within the city, major corridors have the same problem. 1 lane is typically taken up by buses (which are free. So much for pricing!), and on minor corridors you will always run into hippies on bicycles taking up the whole road.

So ultimately the problem with Seattle is centralization, centralization that has come about because of a conscious decision not to allow highway expansion...because of an anti-car mentality that makes the city a horrible place to live in unless your whole world is within 1 sq mile.

Congestion pricing isn't going to fix an artificial restriction such as this.

 
At 1/11/2012 10:43 AM, Blogger AIG said...

"Options are valuable :)"

The problem is that there are no options in Seattle. Now they're talking about reducing speed limits in the city to 20 mph. I'm guessing to appease hippies on bicycles.

Seattle has geographical restrictions, just as NYC does. But NYC has options in the form of a highly developed subway system. It can afford not to have highways.

I never use those bridges anyway, because I don't go in that direction. But the point still stands; centralization and an unwillingness to allow expansion.

 
At 1/11/2012 11:20 AM, Blogger Larry G said...

the phone apps are ultimately a very good thing if they show you BOTH the toll AND the time saving comparison to the option routes.

Then people can make informed decisions with respect to time savings vs dollar savings which is at the heart of the concept behind congestion pricing.

Not everyone who drives at the peak of rush hour really needs to.

If a cost is put on it - then it becomes a value proposition and some people will think it is not worth it.

The I-90 alternate route by the way takes twice the time at many hours according to what I've read.

http://www.issaquahpress.com/2012/01/10/tolls-alter-interstate-90-commutes/

this is a very libertarian idea, no?

 
At 1/11/2012 11:32 AM, Blogger Hans said...

Government is wonderful at creating bottlenecks and higher and higher costs...

This project must be viewed as a success! I am sure that massless transit had its input as well...

 
At 1/11/2012 11:32 AM, Blogger Hans said...

Government is wonderful at creating bottlenecks and higher and higher costs...

This project must be viewed as a success! I am sure that massless transit had its input as well...

 
At 1/11/2012 11:49 AM, Blogger Hydra said...

Toll roads are likely to be managed for maximum revenue rather than maximum traffic throughput.

Maximum traffic throughput occurs somewhere around 25 mph with cars three car lengths apart. Throughput is like the laffer curve problem, at extremely high or low spped the throughput drops off.

But people paying variable pricing won't pay as muh for 25 mph trip as a 50 mph trip, so the throughput curve and the revenu curve are different.

The operator would rather have the higher revenue, even at reuced volume. But the local economy is better off with the higher vaolume (figuring that people travel for some economic reason).

Either too much or too little congestion on the bridge produces a suboptimal result.

 
At 1/11/2012 11:51 AM, Blogger Hydra said...

they won't achieve the ultimate aim of easing congestion.

=================================

They are not supposed to ease congestion, they are supposed to raise money. The congestion argument is a sham. Especially when you have city planners who think that "Congestion is our friend".

 
At 1/11/2012 11:56 AM, Blogger Hydra said...

1 highway lane is typically taken up by as a HOV lane.

=================================

Yes, but even though these lanes appear to be slightly used, they still transport more pasengers than the other lanes - combined. Almost no one believes this, but the data is usually clear.

What is even stranger is that authorities support the idea that HOV lanes are non-productive by eliminating the restrictions during snow emergencies.

 
At 1/11/2012 11:57 AM, Blogger mjb said...

Traffic on the other bridge (I-90) has definitely gotten worse. I see it when I leave work. There used to be no backup where I'm at and since they day they started tolling the gridlock extends probably an extra 5-10 miles.

 
At 1/11/2012 11:59 AM, Blogger Larry G said...

" figuring that people travel for some economic reason"

maybe not a good premise or at least one where we could say any/all trips are equal in economic value.

people won't pay higher tolls unless it delivers something of value to them.

this is what the airlines have learned.

there are business trips and there are discretionary trips for non-business reasons. There are even discretionary business trips.

a "discretionary trip" is a real concept.

but two solo-driven cars could also convert to a two-person car ...saving money and time....

pricing opens up options beyond "free but gridlocked".

 
At 1/11/2012 12:16 PM, Blogger AIG said...

"Yes, but even though these lanes appear to be slightly used, they still transport more pasengers than the other lanes - combined. Almost no one believes this, but the data is usually clear."

I highly doubt that. The HOV lanes are almost always completely empty, and at best the cars going there usually have 2 passengers. Of course, it depends on the particular metro area we are talking about. Others may be different (like the LIE in NY has pretty good use for its HOV lane)

"Toll roads are likely to be managed for maximum revenue rather than maximum traffic throughput. "

Yes unfortunately that is what always happens. They always make the argument that : "it'll ease congestion. Plus you right-wing nuts should like this idea because its market driven!"...except that its not market driven if the price is determined by a bureaucrat.

And its not a market-driven experiment if you have so many other distortions and restrictions in place, rendering you with only 1 or 2 artificial choices.

 
At 1/11/2012 12:29 PM, Blogger morganovich said...

"Options are valuable :)"

that seems like a narrow way to look at options.

before, you had the option to go the other way. moving a mess from one room to another is not "cleaning up".

i can certainly see the value of a "pay for faster travel" option, but you have to look at what options went away too (like getting over i90 in a reasonable time)

for those that are not well located for taking an alternative route, this may not have been much of an option enhancer either.

those on 520 now have to pay more and those on i90 now have to take longer.

i don't think it's quite as simple as you are making out.

to get a real test of dynamic pricing, you'd need to do it on all the bridges and see if it worked.

from what i have seen in the bay area, it will not work.

they have an interesting system in salt lake.

the highways have HOV lanes that you can pay to use even without passengers. it just charges your ez pass transponder. rates vary depending on time of day and traffic.

i have no idea how well it works, but it seemed like an interesting idea. in a hurry, pay 50c and go.

 
At 1/11/2012 12:30 PM, Blogger AIG said...

"people won't pay higher tolls unless it delivers something of value to them. "

Here's the problem. People already pay for these road projects. They can pay tolls too, no problem. But the problem in Seattle, and majority of the US, is that this money doesn't go to provide the service which these people are paying for.

That's the real issue here. Money from the gas taxes and license taxes and tolls, gets wasted on light-rail systems and free buses and HOV lanes and bike lanes. Roads are almost never considered for expansion. Heck, building roads and allowing expansion seems to be the most evil thing these days.

Its social engineering. And we're paying for it, while happily thinking we are partaking in a "market driven pricing system".

Such experiments would be beneficial in places like Minneapolis or Houston, where businesses and people have the ability to shift their patterns and where road money can actually be used on roads. But Seattle? That's just throwing money down the drain for hippie to have more free bus rides.

 
At 1/11/2012 12:43 PM, Blogger Larry G said...

there are 4 pieces to highways that most people only see 1.

1. - initial construction
2. - operations
3. - maintenance
4. - improvements/expansion

fuel taxes in most states has not kept up with inflation and at the same time cars have gotten more and more fuel efficient and in most states less than 10% goes for non-highway purposes.

The question is how can you pay for added capacity ?

the options for doing that now days is pretty limited because are about 80% opposed to increasing gas taxes while "only" 50% are opposed to tolls.

It's the path of least resistance and it's still playing out but whether or not things actually change will ultimately be decided by whether or not voters throw out officials who support tolling.

In Seattle, for instance, the tolls would not have been put on that bridge unless local elected agreed to it...

In some states like Florida - they are creating state-wide toll authorities that use the toll proceeds from cash-cow roads to finance new toll roads...

It's going to continue as long as the gas tax falls further behind and opposition to tolls is lower than opposition to gas tax increases.

 
At 1/11/2012 12:44 PM, Blogger Buddy R Pacifico said...

The tolls on the 520 bridge are established by dynamic bureaucrats and not a dynamic market.

The goal of the tolls should be to raise funds for the new 520 bridge. Busses quickly roll along the bridge and provide no revenue. Social engineering is dynamically enhanced.

Dynamic market pricing would find the optimum toll to maximize load (collections) -- funds to build the new bridge.

So, the tolls will be go into infinity and other revenue sources will have to be found. People such as AIG and myself, who seldom use the bridge, will be taxed to make up the shortfall.

 
At 1/11/2012 12:52 PM, Blogger Hydra said...

because of an anti-car mentality that makes the city a horrible place to live in unless your whole world is within 1 sq mile.

==================================

Yup, and that mentality is not confined to Seattle.


BTW, free might be the appropriate price for buses. it might not even be low enough. In the DC area there is a plan to pay people to run car pools, partly because the HOT lanes that are soon to replace the HOV lanes will result in people paying the tolls rather than deal with the hassle of operating a car pool.

Since much of the money to pay for transit comes from fees on drivers, drivers are apparently willing to pay something to get other people out of their way.

 
At 1/11/2012 12:54 PM, Blogger AIG said...

"People such as AIG and myself, who seldom use the bridge, will be taxed to make up the shortfall."

Correction my friend. You will be taxed! :) My car is registered in NY and I intend to keep it that way for as long as I live here (which hopefully won't be too long). I'd rather give my money to NYS than Washington state. That should say something about how much I trust these bureaucrats with my money.

 
At 1/11/2012 12:54 PM, Blogger Hydra said...

But NYC has options in the form of a highly developed subway system. It can afford not to have highways.

=============================

Not really, even in New york, transit only carries about ten percent of travelers, the vast majority of traffic is still on the streets.

 
At 1/11/2012 12:56 PM, Blogger Hydra said...

Then people can make informed decisions with respect to time savings vs dollar savings which is at the heart of the concept behind congestion pricing.

=================================

Aahh. the perfect knowledge fallacy of free markets.

 
At 1/11/2012 12:57 PM, Blogger Hydra said...

how much I trust these bureaucrats with my money.

================================

Once the bureaucrats have it, it is no longer your money. Why worry about it?

 
At 1/11/2012 12:59 PM, Blogger AIG said...

"Since much of the money to pay for transit comes from fees on drivers, drivers are apparently willing to pay something to get other people out of their way."

Depending on the circumstance, that may be true. But if there is a lack of feedback, then this doesn't work. Hippies vote to increase taxes on the non-hippies so that hippies can get more free stuff. And in Seattle, hippies outnumber even the rats.

That's like saying that Welfare is well-off people paying poor people not to be mugged and robbed. Well, theoretically that is what it is. But practically, it isn't.

 
At 1/11/2012 1:00 PM, Blogger Larry G said...

Clearly tolls are a "disruptive" concept these days.

Some people say if we have to have it they don't want the govt doing it.

Others say exactly the opposite - that they don't want profit-seeking companies to do it.

I think the idea of tolling and dynamic tolling is a done deal with the advent of transponders and license plate reading technology as long as a majority of people oppose increases in the gas tax.

there is no way to build new infrastructure now days because much of the gas tax has lost it's value and maintenance and operations consume more and more of it. Every time we build a new road - we add to the M&O costs.

Toll Booths are going away and more and more roads will have overhead gantries for what is called Open road tolling (ORT).

I think the only way this gets stopped is if Mayors, Gov and CongressCritters get voted out of office specifically over tolling.

Locally, we just had 3 incumbent commissions thrown out of office in part because of their support of a proposed toll road so it's not impossible.

I also note than Congress has a proposed law to create a Federal
"oversight" board for toll roads to insure they are not ripping off people who pay the tolls.

I wonder how many libertarian types who don't like tolls would support govt regulation of it?

;-)

 
At 1/11/2012 1:02 PM, Blogger Larry G said...

" anti-car mentality "

I drove in Seattle and region this summer and I can compare it to traffic in the DC area and Seattle TRaffic is heavy, congested, and in my view sucks big time...

I have not driven in LA or Calif lately and am not dying to to either.

but Seattle traffic is UGLY!

 
At 1/11/2012 1:04 PM, Blogger Hydra said...

Money from the gas taxes and license taxes and tolls, gets wasted on light-rail systems and free buses and HOV lanes and bike lanes.

=================================

Not all of that money is wasted (although much of it seems to be).

One problem is that each mode has its constituency and eah one fights for material advantage. No one looks at the transportation SYSTEM and makes the appropriate trade offs.

 
At 1/11/2012 1:04 PM, Blogger AIG said...

"Not really, even in New york, transit only carries about ten percent of travelers, the vast majority of traffic is still on the streets."

That depends on what you call "NY". Outside of Manhattan, that may be more representative. But either way, NYC has the highest use of mass transit in the world, if I'm not mistaken. My point being that there are alternatives and everything is prices in NYC, even if there are geographical limitations. This is not the case in the example we are talking about here.

"Once the bureaucrats have it, it is no longer your money. Why worry about it?"

Because even in NYS its a lot cheaper.

 
At 1/11/2012 1:07 PM, Blogger Hydra said...

Traffic on the other bridge (I-90) has definitely gotten worse. I see it when I leave work. There used to be no backup where I'm at and since they day they started tolling the gridlock extends probably an extra 5-10 miles.

==================================

This is precisely the problem Arlington expects to see when the HOT lanes become a fact, and it is one reason they sued to halt the project.

HOT lanes are predicted to reduce th use of car pools and increase traffic on local streets.

 
At 1/11/2012 1:13 PM, Blogger Larry G said...

" This is precisely the problem Arlington expects to see when the HOT lanes become a fact, and it is one reason they sued to halt the project.

HOT lanes are predicted to reduce th use of car pools and increase traffic on local streets. "

Arlington could solve this problem with a Cordon Toll which is what many major cities are now doing.

If they had asked permission to institute a Cordon Toll..I wonder what FHWA/VDOT would have answered.

 
At 1/11/2012 1:17 PM, Blogger morganovich said...

"Aahh. the perfect knowledge fallacy of free markets."

what a preposterous statement.

no one said anything about perfect inforamtion.

getting more information so you can make an informed decision is hardly a fallacy.

are you saying it's not of any benefit to see the transit time across bridges and know what it will cost to drive on one in advance of choosing a route?

your statement doesn't make any sense.

 
At 1/11/2012 1:18 PM, Blogger Hydra said...

That depends on what you call "NY". Outside of Manhattan, that may be more representative. But either way, NYC has the highest use of mass transit in the world, if I'm not mistaken.

=================================
I think several asian cities have higher usage.

I do not recall the source at this time, but I believe the statistic quoted compares the entire area in which transit is available, so yes, it is more than just Manhattan. Even in Manhattan, subways carry a surprisingly small amount of the total traffic.

We do not have an agreed upon way to evaluate the costs and benefits of public transport, but Winston and Shirley, in a book published by the Brookings Institute tried to calculate the net public benefit of mass transit systems in the US and concluded that most of them should be shut down, and would be if they were operated by private enterprise.

In Tokyo, transit ridership is 1.5 times that of the entire United States. More than two-thirds of all transit ridership is carried by unsubsidized private rail and bus operators. However those are NEW companies that acquired the assets of the previous companies for almost nothing after they went broke and were taken over by the government.

 
At 1/11/2012 1:19 PM, Blogger morganovich said...

"Once the bureaucrats have it, it is no longer your money. Why worry about it?"

you're kidding, right?

you don't care at all where your taxes go?

 
At 1/11/2012 1:23 PM, Blogger Hydra said...

what a preposterous statement.

no one said anything about perfect inforamtion.

getting more information so you can make an informed decision is hardly a fallacy.

=================================

Agreed. But market theory assues a level of information that never actually exists.

This is a teeny tiny step in the right direction, but it does nothing to shows us wha the right amount of congestion is.

Too little and you ave the rural situation where users are massively subsidized and enjoy congestion free travel. Too much congestion and you waste valuable resources and time.

 
At 1/11/2012 1:28 PM, Blogger Methinks said...

This comment has been removed by the author.

 
At 1/11/2012 1:28 PM, Blogger Larry G said...

" Too much congestion and you waste valuable resources and time"

but not in equal proportions.

and that's the problem with a one-size-fits-all approach where roads are perceived to be "free" but even as we think that - we know there is a "cost" to congestion.

But a Doctor trying to get to a surgery has a much more valuable trip than a maintenance person who has to perform routine maintenance but time is not critical.

 
At 1/11/2012 1:29 PM, Blogger Hydra said...

Suppose that neither bridge were tolled. The APP would still be equally useful, no? you would be comparing apples to apples.

The real benefit in this might be in the data. If everyone used the APP to make their decisions we cold put a monetary value on what people think is a fair trade between distance and time on one hand and money on the other.

What we have here is a perfect real lfe experiment on how to value subjective items. With enough such data we could dispel a lot of other arguments about "subjective" costs.

 
At 1/11/2012 1:30 PM, Blogger Larry G said...

if you assume that Seattle is going to grow and need expanded bridges or else congestion gets much worse - what are the "options"?

 
At 1/11/2012 1:39 PM, Blogger morganovich said...

"Agreed. But market theory assues a level of information that never actually exists."

sure. perfect information is not an accurate assumption, but what did that have to do with the topic? you comment seems like a non sequitor.

further, how much more information would you want to make that decision? information doe not have to be "perfect" for the models to work. in some case, the difference is not enough to matter.

 
At 1/11/2012 1:46 PM, Blogger AIG said...

"if you assume that Seattle is going to grow and need expanded bridges or else congestion gets much worse - what are the "options"?"

We're glossing over an important issue here; why we are in the situation we are in today.

The reason is severe restrictions on where businesses can move and what they can do. When you impose strict land use regulations, and don't allow for expansion of roads, you get centralization. That leads to traffic congestion, with calls for the gov to "do something" to fix the congestion problem. Enter HOV lanes, free buses, light rail etc. Result? Worst congestion.

The Seattle area is the most ridiculous area of the country I've ever seen (admittedly, I have yet to visit California), when it comes to the distribution and balance of businesses and other commercial centers.

I suspect that this is driven by a combination of land-use regulations and lack of roads.

I'll give you an example of the extreme mentality one encounters in this area. The Boeing Everett plant, which easily has tens of thousands of people commuting to it every day, has an atrocious parking system. Its endless fields of parking, with employees having to get there often times more than 1 hour before work to try and find a parking spot.

Why? Because regulators prevent Boeing from building multi-story parking.

 
At 1/11/2012 1:46 PM, Blogger Hydra said...

" Too much congestion and you waste valuable resources and time"

but not in equal proportions.

==================================

Who said anything about proportions? Regardless what the mix of users is, or whether a rod is tolled or not, either too much or too little congestion results in increased costs over the optimal solution.

We do not have any way to agree on the optimal solution, as your example shows. Implicitly, you are making a connection between the value of a trip and the value of the commerce it produces.

If that is the case, then we should toll on GDP produced per trip, rather than a flat toll per vehicle.

 
At 1/11/2012 1:51 PM, Blogger Larry G said...

re: Seattle - looks just like any other major city in terms of traffic and congestion.

Urban Centers are economic powerhouses and seem to have similar problems regardless of land-use policies...

take a look at the Texas Transportation Institute congestion rankings:

http://mobility.tamu.edu/files/2011/09/national-table_1.pdf

everyone thinks their city is unique and causes congestion but the data show that it's common in most urban centers.

 
At 1/11/2012 2:24 PM, Blogger Hydra said...

what did that have to do with the topic? you comment seems like a non sequitor.

=================================

Larry suggested that if the APP provided the right information, then people can make informed decsions. I merely expanded that to the general case, expecting that this conversation would take the turn it did.


how much more information would you want to make that decision? information doe not have to be "perfect" for the models to work. in some case, the difference is not enough to matter.


(So the climate models might work after all, eh?)

Seriously, it depends on what question you are trying to answer. Is it just to reduce congestion on the bridge? Or is the goal to maximize revenue from the bridge?

The main reason we support transportation is to enhance commerce, from which all revenue derives. Larry points out that the guy with the higher revenue goal will pay more to use the bridge. If that is the case then maybe reducing congestion is not the goal.

We can't even agree on what the goal is, let alone how much information we would need to determine if we are meeting that goal. (More or less bikes, more or less transit, more or less aouto lanes?)



You are right, we will never have all the information we need to make truly informed decisions. (By extension we can apply that idea to markets in general: they are not efficient because information is assyetric)

But, even if we agree on what the goal is, and how to measure our performance in reaching it, at some point the transaction costs overwhelm the gains to be made from the increased knowledge. That is the point at which you make a social decison rather than an economic one.

Sure as you do that, some clown is going to complain about how "his" taxes are being spent inefficiently. And, he is going to make the same claim about "his" taxes on myriad programs or projects,as if "his" taxes were paying for each and everyone of them.


I would argue the purpsoe of the bridge is to improve commerce. We cannot know what commerce each vehicle is responsible for, although the drivers might have partial knowledge of that, as Larry points out.

Therefore one makes the simplifying assumption that all vehicles are equal (on average) and the way you maximize area wide commerce is to set tolls to maximize throughput on the bridge, irrespective of what revenue that raises for the bridge operator.

Whatever losses he incurs compared to what his max revenue might be, should be made up from a sales tax on the increased commerce.

Everyone benefits and now on pays an undue expense.

This shows that tolls are not the complete answer.

 
At 1/11/2012 2:41 PM, Blogger Larry G said...

"Seriously, it depends on what question you are trying to answer. Is it just to reduce congestion on the bridge? Or is the goal to maximize revenue from the bridge?"

basically you have a valuable resource that is of more value to some folks than others so you establish a price.

The APP, by the way, "works" no matter what the reason for the congestion is or the reason for the tolls.. it basically provides you with the information that you need to decide what is more important to you.

That APP, for instance...used northbound on I-95 out of Richmond towards Washington might warn you than there is a 2 hour backup on the beltway and you then can decide how to "pay" the price to respond to it.

right now.. your choice is to divert or not.

toward the end of this year you might have 3 choices, divert around DC, go sit and wait or take the HOT Lanes.

If of the 3 - $8 buys you 2hours.. and you're due for an appointment that will net you $500 in Md...you may find the $8 bucks dirt cheap.

But if the $8 bucks gets you to Grandma in time for dinner and Grandma is an awful cook.. you'd probably not take that deal.

 
At 1/11/2012 2:47 PM, Blogger Walt G. said...

A quick bit of research shows the toll was enacted by law to provide funds for a replacement bridge. Accordingly, success would be achieved by creating the funds forecast from the toll and any congestion or congestion relief would be a secondary concern from the government's perspective.

 
At 1/11/2012 2:51 PM, Blogger Larry G said...

you're going to see this more and more for road expansions, improvements, new lanes, etc.

Virginia has a proposal in right now to toll the existing I-95 mainline to use the tolls for I-95 improvements - only.

If they receive approval - I would not be surprised to see Va and other states submit an avalanche of like proposals.

the game changed when open road tolling became a reality.

 
At 1/11/2012 3:16 PM, Blogger Buddy R Pacifico said...

Walt writes:

"A quick bit of research shows the toll was enacted by law to provide funds for a replacement bridge."

Walt,

Washington House Bill 1773, passed in 2008, authorized variable tolling. The highest tolls come at peak travel times, and can be avoided by taking public transportation.

Page 2 of the bill synopsis tells us "When to Use Tolling" and is summarized as:

"The social, environmental, and economic effects of the tolling should be considered, and the tolling should be directed at making progress toward the state's
greenhouse gas reduction goals."

So, tolling should be to pay for the bridge BUT this bill stated:

"...tolling should be directed at making progress toward the state's greenhouse gas reduction goals."

So, paying for the bridge is secondary. If paying for the bridge was primary then the state would be trying to maximize toll revenue.

 
At 1/11/2012 3:24 PM, Blogger morganovich said...

"Accordingly, success would be achieved by creating the funds forecast from the toll and any congestion or congestion relief would be a secondary concern from the government's perspective."

success would be achieved when they get rid of the toll again once the bridge is paid for.

alas, that so rarely happens.

 
At 1/11/2012 3:29 PM, Blogger Larry G said...

" once the bridge is paid for"

problem is.. that's a misconception.

1. - initial construction
2. - operations
3. - maintenance
4. - future improvements

it's a cycle... does not end...

 
At 1/11/2012 3:58 PM, Blogger Walt G. said...

Buddy R Pacifico,

I don't read it the same as you do (see an excerpt from your source below: "must be set to meet
anticipated funding obligations"), but you would need to research deeper to see what the performance measurements are to know for sure.

"Setting Toll Rates. Toll rates, which may include variable pricing, must be set to meet
anticipated funding obligations. To the extent possible, the toll rates should be set to
optimize system performance, recognizing necessary trade-offs to generate revenue."

 
At 1/11/2012 4:10 PM, Blogger morganovich said...

"problem is.. that's a misconception.

1. - initial construction
2. - operations
3. - maintenance
4. - future improvements

it's a cycle... does not end..."

right, but that was covered by the old toll. this price hike is to pay for a new one. so it should go away once it's paid off.

wanna bet it doesn't?

 
At 1/11/2012 6:01 PM, Blogger AIG said...

"...tolling should be directed at making progress toward the state's greenhouse gas reduction goals."

Success for the Green Party bureaucrat in Washington State is when a "transportation" project succeeds in reducing transportation and movement to the point where everyone is reduced to walking in sandals, cycling on a mono-cycle, or preferably not going anywhere at all.

If you don't think that's how they measure their success, just ask them.

 
At 1/11/2012 6:04 PM, Blogger AIG said...

"it's a cycle... does not end..."

Which is why we are continuously all paying taxes for. If this money actually went to these activities, the tolls would not be necessary. But they don't, and the tolls are in addition to all the other taxes.

If the tolls were used to...replace...the taxes, that would be a different discussion.

 
At 1/11/2012 9:16 PM, Blogger Ron H. said...

"Suppose that neither bridge were tolled. The APP would still be equally useful, no? you would be comparing apples to apples."

No.

"The real benefit in this might be in the data. If everyone used the APP to make their decisions we cold put a monetary value on what people think is a fair trade between distance and time on one hand and money on the other."

Actually if the app is widely used, it becomes useless. Imagine 10,000 commuters using the app as they leave work, and finding that the I90 bridge is their best choice. By the time they all get there, it will no longer be best. What then? Will they decide tomorrow to choose the opposite indication?

Here's the thing. Before congestion pricing, each individual driver already made what they considered their best choice. By adding a higher toll, you are costing all drivers more, either in time or money.

A very few may be able to change the time of day they travel, but they are still paying more in some way, or they would have chosen the new time already.

"Here have here is a perfect real lfe experiment on how to value subjective items. With enough such data we could dispel a lot of other arguments about "subjective" costs."

No "we" don't, and no "we" couldnt. At best you have an indication that a specific toll may cause certain traffic changes, at a specific day and time, a fairly useless statistic. This indicates very little about individual preferences, or what effect different toll amounts would have at different times.

The benefit of congestion pricing is higher revenue for the bridge operator, and a faster trip for those whose time is more valuable to them than the higher toll. Everyone else takes it in the shorts.

Buddy quoting from WHB 1773:

"...tolling should be directed at making progress toward the state's greenhouse gas reduction goals."

Bingo! in English, that means "let's make driving more expensive, and more congested, so that our rapid transit projects look better."

 
At 1/11/2012 9:31 PM, Blogger jorod said...

Make all roads toll roads.

 
At 1/11/2012 9:32 PM, Blogger jorod said...

Make all roads toll roads. Give the taxpayer a break from maintaining free roads.

 
At 1/11/2012 10:30 PM, Blogger Methinks said...

i can certainly see the value of a "pay for faster travel" option, but you have to look at what options went away too (like getting over i90 in a reasonable time)

Morganovich,

I deleted my previous response to you because I realized it wasn't quite true.

Net optionality has still increased. Commuters, on net, are still better off.

Some commuters are worse off because their previously uncongested routes are now more congested. It's costing them more time to get to their destination and, if that's their preferred route, going the longer way through 520 and paying the price doesn't decrease their commute time, it only increases the cost of commuting. So, they bear part of the cost of the new option on 520.

However, since those routes were not congested before, then by definition, fewer people were traveling on them, so fewer people lose and more people gain.

On net, there is more optionality.

I've made some assumptions about the relative congestion, of course.

 
At 1/12/2012 3:34 AM, Blogger Ron H. said...

Methinks: "However, since those routes were not congested before, then by definition, fewer people were traveling on them, so fewer people lose and more people gain."

But aren't those who have changed their route and are now causing the greater congestion also losers? They are now using a route they like less than the 520, to avoid the extra toll. The only winners are those who continue to use the 520, which is now less congested, and who value the shorter trip more than the additional toll. Everyone is paying more in one form or another.

 
At 1/12/2012 5:54 AM, Blogger Larry G said...

when any product or services becomes less available - everyone pays more, right?

compare this to stadium seats that people always used and a big game coming...

but in this particular case - ultimately everyone will get a new bridge paid for by people now - either through tolls or slower travel times.

this technique is being used across the country to finance new roads..additional lanes/etc.

Instead of raising the gas tax on everyone statewide - the tolls are more specific - to those who actually use that particular bridge.

 
At 1/12/2012 6:22 AM, Blogger Methinks said...

But aren't those who have changed their route and are now causing the greater congestion also losers?

No, Ron. They're making a choice.

Those people who choose the alternate route value money over time. But that may not be the case every day. If they're running late or if they have an important meeting, they have the option to switch that preference to time over money - a choice they didn't have before.

The real losers are people for whom the shortest route is an alternate route for the 520. Their commute now takes longer and their alternative route (ostensibly the 520) will now cost them both time and money.

 
At 1/12/2012 7:05 AM, Blogger Walt G. said...

Drivers can be so short-sighted and narrowly focused, but there is another perspective that no one has explored here. Assuming prefect traffic flow for the existing conditions, the only way to improve capacity is to increase it with a bridge that has more traffic flow capacity. By design, those who pay the toll are doing that by paying money and those who don't pay the toll are doing that by paying in increased travel time from their newly congested route.

The drivers are going to pay either way, so the only question is whether the payoff is worth it or not to them when the new bridge is built. How efficiently the government can build bridges or can handle money does not matter for this argument because they have a monopoly on bridge building using our current system so that’s a constraint you have to work within. The only question is whether to use debt or equity funding to build the bridge. You need a bridge? You want a bridge? You gotta pay for it now or later.

 
At 1/12/2012 7:18 AM, Blogger Larry G said...

what is interesting about this is the opinions of those who often espouse libertarian viewpoints.

there is also one other perspective and that is to have a private entity (or a govt one) build the new bridge by floating bonds and paying the back from tolls but in this case - if the other two routes remained untolled - the new bridge might not get enough toll traffic to pay back the bonds.

The question in my mind is - given the need for a new bridge - and the complexity analyzing current traffic trends and how they may change and how that may affect tolls - is this something that govt should do or private enterprise?

Could this have worked with fixed tolls or were dynamic tolls really needed to make the project viable?

 
At 1/12/2012 7:23 AM, Blogger Methinks said...

Drivers can be so short-sighted and narrowly focused...

Walt, that made me smile.

I should hope so! Drivers are necessarily short-sighted (just trying to get to their destination).

But I truly hope they're all narrowly focused...on driving!

:-)

 
At 1/12/2012 7:58 AM, Blogger Walt G. said...

Methinks,

I wrote a graduate research paper on the U.S. highway system before the Interstate system. The Interstate system decimated towns and we lost a lot of culture at the same time, but it is amazing how fast you can get almost anywhere by car in the U.S. now. People visit places now they would never have using the old highway system.

I think we tend to take a lot for granted about how good things are today to travel by car. Lack of efficiency aside for government projects that should be addressed, someone has to pay for all of it now or owe for it in the future. Isn’t it great that when the light is green on your side that it is red on the other side often enough we depend on it? Or how about going over a bridge and not wondering if it will hold the weight of your car. These luxuries do not happen in every country. We are fat, rich, and spoiled.

 
At 1/12/2012 10:45 AM, Blogger Buddy R Pacifico said...

If the purpose of tolls on the 520 Bridge is to pay for a new bridge then:

Tolls would be set to optimize revenue. Current bridge traffic is down 40% from pre-toll days.

I would posit that tolls of $2.50, during commute hours vs. $3.50, would be optimum. The bus ride on Sound Transit costs $2.50 each way. Sound Transit markets its bridge commute as a toll saver.

This could return bridge traffic to pre-toll levels and dramatically increase toll revenue based on much higher volume. The individual auto commuter would save up to $500.00 in tolls. The social engineers would be whining about decreased bus use, but the goal of paying for a new bridge would be more realistic.

BTW, I will pay the toll on the 520 Bridge today to avoid traffic for an Eastside meeting today. Dynamic Non-market tolling does ease congestion, but its goal to pay for a new bridge is very questionable.

 
At 1/12/2012 11:12 AM, Blogger Walt G. said...

Buddy R Pacifico,

You are assuming that the same number of drivers will choose one of two routes as they did before the toll. How many of the drivers can choose the third option: use neither route. I used to go to Canada five or six times a year, but I don't go at all now since the U.S. requires a passport to do so. That might change, but for now there's nothing there I can't do here.

 
At 1/12/2012 11:17 AM, Blogger Methinks said...

Walt,

It would be interesting to know how the highways might have looked had it not been government that built them - and how differently the culture might have evolved.

Yes, we are delightfully rich and unfortunately fat :-)

 
At 1/12/2012 12:02 PM, Blogger Buddy R Pacifico said...

This comment has been removed by the author.

 
At 1/12/2012 12:08 PM, Blogger Buddy R Pacifico said...

Walt wrote:

"Buddy R Pacifico,

You are assuming that the same number of drivers will choose one of two routes as they did before the toll."

Walt, no I am not. I am simply saying that lowering the toll will increase revenue, resulting in much higher traffic volumes. A forty percent drop in auto traffic, as it is now, brings in much less in tolls then a fifteen percent drop.

For example:

Pre-tolling average traffic volume was 20,000 cars daily.

After $3.50 each way tolling traffic volume 12,000(60% previous) cars dailey or $42,000 in revenue.

With a $2.50 toll each way (matches toll-free bus fare) a traffic volume of 21,000(85% previous) results in dailey revenue of $52,500 daily.

An increase of $12,500 daily times 366 (this year leaps) is a revenue gain of $4,575,000 yearly, towards the goal paying for a new bridge.

In twenty years about $91,500,000 more in tolls would have been collected by reducing the tolls a buck -- bridge traffic still reduced 15% but not 40%. Individual drivers would have saved ~$10,000 during their twenty year bridge driving career.

 
At 1/12/2012 1:39 PM, Blogger Ron H. said...

Buddy: "With a $2.50 toll each way (matches toll-free bus fare) a traffic volume of 21,000(85% previous) results in dailey revenue of $52,500 daily."

How did you arrive at the 21,000 (85%) number? Unless I'm misunderstanding you, it appears that you have an upward sloping demand curve.

Perhaps Mr. Laffer could help determine the toll that produces the most revenue.

 
At 1/12/2012 1:39 PM, Blogger Walt G. said...

Buddy R Pacifico,

Your numbers look credible assuming high fixed costs and low variable costs and that the increased traffic does not lead to much higher maintenance costs. Additionally, profit maximization would have to be a 100% factor in the pricing decision instead of just a 51% factor that would constitute the “main” purpose. We look for black-and-white answers in a gray world.

 
At 1/12/2012 2:01 PM, Blogger Ron H. said...

Walt: "I used to go to Canada five or six times a year, but I don't go at all now since the U.S. requires a passport to do so. That might change, but for now there's nothing there I can't do here."

Until we elect people who understand that we are not all terrorists unless we can prove otherwise, that's likely to only get worse.

 
At 1/12/2012 2:43 PM, Blogger Walt G. said...

Ron H.

Well, I don't mine being trapped in the U.S. at all. If I run out of stuff to do here, I will worry about it then.

 
At 1/12/2012 4:50 PM, Blogger sethstorm said...

Still not enough justification for non-predictive pricing.

 
At 1/12/2012 6:38 PM, Blogger Ron H. said...

Walt : "Well, I don't mine being trapped in the U.S. at all. If I run out of stuff to do here, I will worry about it then."

On of the things you could do in the US is to drag that 5th wheel of yours to Alaska. Whoops! Not without a passport.

Another is to take an Alaskan cruise through the inside passage. Whoops! Not without a passport.

Here's why:

The Jones Act of 1920 requires that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the U.S., owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents.

As few or no cruise lines meet this requirement, they must travel between a US port and a foreign port. In the case of Alaskan cruises, between Anchorage and Vancouver.

Your ship disembarks in Vancouver, where you must go through Canadian customs, then it's a short bus ride to Seattle where you must go through US customs, before boarding a plane for home.

This is the same ridiculous requirement that the current administration wouldn't relax so that Dutch oil spill response teams could help keep oil off the Gulf coast after the Deepwater Horizon oil blowout.

 
At 1/12/2012 6:46 PM, Blogger Ron H. said...

"Not everyone who drives at the peak of rush hour really needs to."

Who do you know that drives in heavy traffic when they don't need to?

"If a cost is put on it - then it becomes a value proposition and some people will think it is not worth it."

Do you mean to say that a 2 hour commute in heavy traffic for what would otherwise be a 30 min drive isn't enough of a cost?

 
At 1/12/2012 7:07 PM, Blogger Larry G said...

no one is really guaranteed a fixed commute time.

many people take a job and drive til they "qualify" to get more house for their money but there is a cost to that in commute time that steadily degrades as more and more growth occurs and more and more commuters clog the roads.

If nothing is done - the commute time will continue to worse until virtual gridlock at peak hour.

how is this fixed?

where does the money come from to add capacity? Who should it come from?

 
At 1/12/2012 9:53 PM, Blogger Hydra said...

Larry, i don;t know where you get that crap. The average commute is only around 27 minutes and it has barely increased in years.

People are rational about this.

 
At 1/12/2012 9:58 PM, Blogger Hydra said...

This could return bridge traffic to pre-toll levels and dramatically increase toll revenue based on much higher volume. The individual auto commuter would save up to $500.00 in tolls. The social engineers would be whining about decreased bus use, but the goal of paying for a new bridge would be more realistic.

==================================

Bingo.

I would go one step further: lower the tolls until the bridge reaches maximum throughput capacity.

This would increase business throguhout the area, and you could make up the loss in bridge tolls through a dedicated sales tax, so that everyone who benefits pays some of the cost, even if they are not direct users of the bridge.

 
At 1/12/2012 10:04 PM, Blogger Hydra said...

This indicates very little about individual preferences,

==================================

I was not referring to individual preferences. Just pointing out that here is a chance to put a price on gross subjective costs.

Averaged over a lot of people the individsual subjective costs won;t be far off.

 
At 1/12/2012 10:10 PM, Blogger Hydra said...

.people won't pay higher tolls unless it delivers something of value to them.

isn;t that the same as saying

that people travel for some economic reason


They are already paying to travel, that is a toll, which they won;t pay unless they have an economic reason. On top of that they won't pay a higher toll without an additional economic reason.

They won't sit in traffic without a reason, either.

 
At 1/12/2012 10:11 PM, Blogger Hydra said...

the tolls are in addition to all the other taxes.


Read my lips, no new taxes, just user fees.

 
At 1/12/2012 10:12 PM, Blogger Hydra said...

pricing opens up options beyond "free but gridlocked".


So does loosening up land restrictions which serve as subsidies to the gridlocked areas.

 
At 1/12/2012 10:23 PM, Blogger Buddy R Pacifico said...

Ron H. asks the logical question:

"How did you arrive at the 21,000 (85%) number? Unless I'm misunderstanding you, it appears that you have an upward sloping demand curve."

Ron H., thank you for pointing out my mistake. The 85% figure (my assumption) should have been 17, 000, or eighty-five perceent of 20,000.

I think I was excited about spoiling myself with a breezy trip over the 520 Bridge without a traffic jam. Yes, it was glorious, and will cost me the $3.50 toll each plus a $1.50 service fee, each way today. A lot less stress for the eight buck cost.

Neverthless, the non-market toll is not optitmal as a revenue raiser.

I hope my volume math makes better sense now.

 
At 1/12/2012 10:24 PM, Blogger Hydra said...

"Once the bureaucrats have it, it is no longer your money. Why worry about it?"

you're kidding, right?

you don't care at all where your taxes go?

=================================

Sure, but Im not crazy enough to think that "my" taxes are wasted on everything gone bad.


The way I look at it "my" taxes went for one fill-up on an F-15. They are gone and I got my money's worth. Or maybe my taxes were enough to replace a couple of the landing cables on an aircraft carrier. Those things are really expensive, and if you think the specs on the $500 toilet seat are ridiculous.........


I think the "a don't want my taxes wasted on A or B or C or D or E or F is ridiculous. No one pays enough taxes to worry about them being wasted on ALL of those things.

Somewhere out there is the ONE thing that is the biggest waste. We should find that thing and focus on it.

First we have to agree on what waste is, and that usually involves some subjectivity. There are ways to measure such things, and the bridge brings us a good example.

So, yeah, if you want to start a campaign to seek out the biggest source of waste, then I'm with you.

My current favorite candidate for biggest waste is the Republican Primary campaign.

 
At 1/12/2012 11:26 PM, Blogger Ron H. said...

"They are already paying to travel, that is a toll, which they won;t pay unless they have an economic reason. On top of that they won't pay a higher toll without an additional economic reason.

They won't sit in traffic without a reason, either.
"

And what will they do instead?

 
At 1/12/2012 11:44 PM, Blogger Ron H. said...

Buddy: "I think I was excited about spoiling myself with a breezy trip over the 520 Bridge without a traffic jam. Yes, it was glorious, and will cost me the $3.50 toll each plus a $1.50 service fee, each way today. A lot less stress for the eight buck cost."

Ahh, that's what I miss about commuting. the days when traffic was light. :)

Yes, your math is now within the realm of reason. :) But I still wonder how you arrived at the 85% number. I only see two data points - 20,000@ $0.00, and 12,000 @ $3.50. Are you just guessing, or am I still missing something? I don't think the traffic response to toll price is linear.

 
At 1/12/2012 11:55 PM, Blogger Ron H. said...

"My current favorite candidate for biggest waste is the Republican Primary campaign."

You are confused. Primary campaigns are financed by private donations, and public funds collected through voluntary check-offs on your tax return.

Many candidates forego public funding, as with most other federal money, it comes with strings attached.

You don't have to like the activity, But there are many jobs created and much money spent in the economy that adds to GDP.

If you think that kind of entertainment is a waste, you must also consider movies, concerts, and sporting events to be a waste also.

You can't vote to end private spending.

Learn some economics.

 
At 1/13/2012 7:36 AM, Blogger Larry G said...

re: economic reasons for:

1. - paying tolls for reliable trip time

2. - sitting in traffic for indeterminate time (or even for a somewhat predictable time).

the presumption that all economic reasons are the same - at any time of the day is antithetical to realities and it forms the basis for the rationale behind dynamic pricing which is an evolving concept in tolling.

A doctor trying to get to an emergency surgery vs an orderly at the same hospital who will distribute linen but is supposed to be there at a certain arbitrary schedule.

A Fed Ex envelope that must be delivered at 8am verses political fliers to be put on parked cars later in the day.

Not everyone who travels at the height of peak hour actually has an "equal" economic reason as others might yet un-managed congestion is basically a one-size fits all proposition no matter the economic reason.

so.. I'm not saying that some people have "no reason" to travel at rush hour but that the reasons for travelling at rush hour have varying economic values that assume that time-consuming congestion is preferred to delaying the trip (for instance) the same amount of time that it would take for the congestion to reduce or clear.

the reason people don't wait is often because they don't know "reliably" just how long the delay will last whereas if they could be more assured of a more reliable trip time estimate - it could save them time and money verses the cost of the toll.

For others the toll would be clearly an extra cost with no benefits.

How much that is "worth".. the "value" of that is determined by each person.

A physician on his/her way to an ER incident is going to gladly pay that toll.

the orderly who will later distribute linens to rooms at that same hospital may not need to be there as urgently.

the guy visiting his bookie may decide that being there at a particular time is (or is not) worth it per their individual circumstances.

I think dynamic pricing is optimizing the supply and demand availability of a valuable and limited resource.

here's an interesting paper on investment grade toll studies.. ironically from Washington State:

" Limitations of Studies Used
to Advance Toll Projects"

http://wstc.wa.gov/Rates/Tolling/FR1_WS_TollStudy_Vol2_Paper06.pdf

 
At 1/13/2012 7:39 AM, Blogger Walt G. said...

Buddy R Pacifico, Ron H., Hydra,

You have legitimate competing interests that request different tolls to accomplish their objectives. Assuming tolls will be collected, the three following experts have valid reasons to set their tolls, and the voters elected the people making the laws because that is our process, here’s a reasonable compromise. profit maximizer Buddy’s proposed toll = $2.50 and weight at 50% because profit maximization was the stated main purpose of the law = $1.25, traffic engineer’s proposed toll to relieve congestion $4.00 and weight at 25% = $1.00, environmentalist's proposed toll to deal with greenhouse gases $8.00 and weight at 25% = $2.00. So, the proposed consensus toll is $1.25 + $1.00 + $2.00 or $4.25.

All that is left now is a convincing written proposal and presentation of the $4.25 toll to the decision-maker. If the answer is no, at least you have a new starting point toll. No one is completely happy, but everyone had input, and hopefully everyone can live with the results. Chances are that you will have to deal with these same people again in the future, so you might as well figure out a way to make it work without getting everything you wanted.

At some point someone has to start looking for solutions instead of problems. That is where good leadership comes into the picture.

 
At 1/13/2012 9:10 AM, Blogger Larry G said...

one would think that dynamic tolls would generate more revenue than fixed tolls though.....

if a dynamic toll is used in a way to maintain a 45mpg (or similar) speed - then the trip time is reliable - by design.

in a fixed toll scenario - there is no such assurance ....

would a fixed toll generate more revenues?

 
At 1/13/2012 9:36 AM, Blogger Hydra said...

one would think that dynamic tolls would generate more revenue than fixed tolls though.....

if a dynamic toll is used in a way to maintain a 45mpg (or similar) speed - then the trip time is reliable - by design.

in a fixed toll scenario - there is no such assurance ....

would a fixed toll generate more revenues?

================================

45 MPH is actually pretty fast, maximum throguhput occurs at much lower speeds, more like 25 MPH.

At 25MPH you get a lot more cars, but people won't pay much for a trip at that speed.

On the other hand, when traffic is low and trip speeds are high, those will be the very people traveling off peak, for whom the premium they are willing to pay will be low.

It is a classic trade off, and the bridge situation is a near perfect way to study this, and determine what the average utility function is.

 
At 1/13/2012 9:39 AM, Blogger Hydra said...

Walt's proposal is a fair example of what I mean when I suggest that we need market based regulation.

 
At 1/13/2012 10:01 AM, Blogger Hydra said...

but that the reasons for travelling at rush hour have varying economic values

================================

Except they call it rush hour for a reason.

If you kick 5 people off the road so that doctor can get through, their economic reason only as to be 25% (each) of the doctors reason, before you lost overall economic value by tolling (extra, over and above what you woulod get for tolls at max throughput).


The question remains whether you use dynamic pricing and adopt a pure free market condition in which the bridge operators get what the market will bear, directly from the users, or whether there is a way to determine that the overall market, the total area wide commerce is enhanced by operating the bridge simpley for maximum throughput, with the bridge operators loss made up through some other revenue stream.

Such a plan might be an example of everyone being better off, and no one being worse off. The bridge operator still gets his max revenue, and the wider economic body gets more commerce, of which they give up a small part to the bridge operator.

 
At 1/13/2012 10:40 AM, Blogger Buddy R Pacifico said...

Ron H. asks myself:

"Yes, your math is now within the realm of reason. :) But I still wonder how you arrived at the 85% number. I only see two data points - 20,000@ $0.00, and 12,000 @ $3.50. Are you just guessing, or am I still missing something? I don't think the traffic response to toll price is linear."

Ron, I was guessing. I based my guess on the fact that the toll avoiding bus fare is $2.50. Thus, a $2.50 toll would negate the toll avoidance attraction for busses.

I figured that some drivers, about fifteen percent, would forego tolls and busses, and instead use alternate routes. Your suggestion of the Laffer Curve is instructive in almost all tax schemes. I assume a $2.50 toll would be at the peak of a skewed curve -- rising sharply and gradually falling off.

 
At 1/13/2012 2:11 PM, Blogger Ron H. said...

Buddy: "Ron, I was guessing. I based my guess on the fact that the toll avoiding bus fare is $2.50. Thus, a $2.50 toll would negate the toll avoidance attraction for busses."

Ah. OK. Actually the bus works against the stated goal of collecting money for a new bridge. If enough people ride the buses, the bridge will never get built.

I love it when government agencies work at cross purposes.

 
At 1/13/2012 2:59 PM, Blogger Walt G. said...

Ron H.,

There are trade-offs. The secondary goals of reduced congestion and greenhouse gases might be obtained if more people ride the bus or stay home.

 
At 1/13/2012 3:51 PM, Blogger juandos said...

"The secondary goals of reduced congestion and greenhouse gases might be obtained if more people ride the bus or stay home"...

Gee walt g, what's wrong with greenhouse gases?...:-)

 
At 1/13/2012 5:31 PM, Blogger Ron H. said...

Walt: "There are trade-offs. The secondary goals of reduced congestion and greenhouse gases might be obtained if more people ride the bus or stay home."

But no secondary goals were stated. The reason for initiating a toll was to collect funds for a new bridge. Anything else, like lower traffic volume, or riding the bus, works against that goal.

The bridge operator gains nothing from lower congestion except perhaps a slightly longer maintenance cycle for roadway surface repair, except that if lower congestion is due to higher bus traffic, most likely that cycle will be shorter.

No reasonable person cares about greenhouse gases, and in any case, reducing traffic on the 520 bridge means most of the congestion will occur somewhere else.

 
At 1/13/2012 6:04 PM, Blogger Walt G. said...

Ron H.,

Almost any major program has multiple stakeholders who have conflicting objectives. Most contracts are bargained; compromised objectives are normal. I didn't read the law slowly or deeply, but revenue and greenhouse gas reduction were in there.

I don't know how reasonable is defined in this case, but the people who wrote the law (probably with lobbyists’ help) were elected by the voters.

So, the congestion will move, and some revenue that was not there before will raised, right? If the voters do not like the results, they should vote their representatives out of office.

 
At 1/13/2012 6:21 PM, Blogger Ron H. said...

"I would go one step further: lower the tolls until the bridge reaches maximum throughput capacity."

But that may not generate the maximum revenue.

"This would increase business throguhout the area, and you could make up the loss in bridge tolls through a dedicated sales tax, so that everyone who benefits pays some of the cost, even if they are not direct users of the bridge."

How would anyone determine who benefited and who didn't, or by how much? How would the tax be assessed?

You realize, don't you, that the maximum number of cars flows across the bridge when there is no toll. Any toll will drive some number to use alternate routes.

 
At 1/13/2012 7:09 PM, Blogger Walt G. said...

"How would the tax be assessed?"

A government agency sells bonds against the toll revenue and any shortfall is made up from tax increases of some sort or transfers from accounts that have a surplus. This happens every day.

 
At 1/13/2012 9:17 PM, Blogger Ron H. said...

Walt: "A government agency sells bonds against the toll revenue and any shortfall is made up from tax increases of some sort or transfers from accounts that have a surplus. This happens every day."

How would the tax be *assessed*?

 
At 1/13/2012 9:39 PM, Blogger Ron H. said...

"If you kick 5 people off the road so that doctor can get through, their economic reason only as to be 25% (each) of the doctors reason, before you lost overall economic value by tolling (extra, over and above what you woulod get for tolls at max throughput)."

This is one of the silliest things you have written in a while.

All value is subjective. You can't quantify it. You can't compare your value to someone else's and say yours is 37% more important.

You can't measure others' values and compare them, as in the doctor values the trip 5 times as much as an orderly or an insurance salesman.

Can you say that you like apples 40% more than you like oranges, or can you only say you like them more? Even that answer might change after you have eaten only apples for a week.

Think about these things before you post such nonsense.

 

Post a Comment

Links to this post:

Create a Link

<< Home