The Case for Congestion Pricing

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Every now and then Ben & Jerry’s holds a free ice cream cone day during summertime. As you know if you’ve ever tried to get your free cone, showing up may not cost you any money, but it sure does take a lot of time. And of course it does! Ice cream is tasty. People like it. It’s the sort of thing many people would willingly exchange money for. And when you lower the price of something valuable to zero, what you get is overconsumption and long lines. Raise up the price of ice cream, and the enormous lines dissipate. But if we decided to make every day free ice cream day, with the ice cream paid for out of tax revenues and then handed out for free to whoever wanted it, we would find that hot summer days we had huge ice cream lines.

And so it goes with our roads. Put in a road somewhere and unless it’s a Bridge to Nowhere-style boondoggle, it’ll spur development along its route. And with that development comes vehicles. And soon enough it becomes too many vehicles. Access to a well-situated road is worth more than $0.00 and yet access to most well-situated roads costs just $0.00 and therefore you wind up with too many vehicles and too much traffic. The Washington Post has a report on how DC area businesses are trying to respond to increasing traffic problems in the city by increasing the size of their fleet of delivery vehicles. Individually, that makes sense — if you can’t make your deliveries on time, adding more trucks will help. But, again, because access to the roads is free lots of people will try to respond to congestion by taking up more space on the streets. And that, of course, only makes the overall congestion problem worse.

What’s needed is a system in which we levy a fee for using the roads at peak times, with the money plowed into transit services. Then some trips that currently occur at peak times will shift to less-crowded off-peak times. And some trips that currently occur at peak times will shift onto transit or not be undertaken. And firms that feel they really do need to be on the roads at peak times will pay the fee, rather than paying to add trucks. All this will reduce the traffic burden and create a situation wherein rush hour car commuters, yes, will be burdened by an additional fee but in exchange will get much faster and easier commutes. Meanwhile, air quality will be improved and emergency services vehicles don’t wind up stuck in traffic. The idea is, yes, unpopular at the moment but if American cities started doing it people would quickly find that it makes almost everyone better off in the end.