The Demand Curve Under Road Pricing and the Problem of Political Feasibility
Road pricing is widely advocated as a solution to congestion problems. The underlying theory is well developed, and we even have the technology to implement it without toll booths. Only political barriers remain. Decision makers are reluctant to retrofit tolls on existing highways because they do not know what circumstances might make such an action acceptable to the public. This paper develops a graphical model that displays the interaction between road capacity, user demand, travel speed and toll charges. The model is then used to analyze the sources of public resistance to road pricing. Might the potential response to road pricing be predicted using data from the new toll roads now being built around the United States? Our model shows it cannot. Political success depends on the demand characteristics at the right-hand side of the demand curve, while toll road data only trace out the left-hand side of the curve. Our model also shows situations where the new toll roads are likely to generate public anger. The Appendix discusses an experimental design that uses unobtrusive measures to assess the effect of a transportation project.