Buying your way out of a jam

Fas­ci­nat­ing idea. Express toll­way lanes that dri­vers may elect to use—at vari­able cost—to escape con­ges­tion. bq. The price would change with the degree of con­ges­tion, so that a pre­mi­um is charged when the rest of the road­way is espe­cial­ly crowd­ed but the toll drops as the high­way emp­ties. On State Road 91 in South­ern Cal­i­for­nia, one of the ear­li­est exam­ples of this rel­a­tive­ly new trend, express lane tolls range from $1 to $6.25, depend­ing on the traf­fic in the adjoin­ing free lanes. (“Wash­ing­ton Post”: The mar­ket is a form of auc­tion: the few­er dri­vers demand­ing the use of the toll-lanes the low­er the price. As the toll-lane demand ris­es, so does the price until sup­ply (of rapid tran­sit) and demand (to escape the traf­fic jam) equi­li­brates. But is the mar­ket effi­cient? Dri­vers (the buy­ers) are at a great dis­ad­van­tage com­pared to the high­way author­i­ties (the sell­ers) when it comes to infor­ma­tion about the state of traf­fic and the aver­age expect­ed time to some arbi­trary point ahead. How do dri­vers decide on whether to accept the offer (price) or to wait in the hope that (if there are few tak­ers) the price will fall? Or do they buy on impulse, as a mea­sure of frus­tra­tion? Is this an effi­cient means of defin­ing a mar­ket for ‘de-con­ges­tion’? Per­haps the law requires the high­way author­i­ty to pro­vide this infor­ma­tion (e.g. on road­side signs)? If not, there could be an adver­tis­ing bonan­za for local radio in this: or for cell/mobile phone val­ue-added ser­vices. In the absence of such infor­ma­tion ser­vices, you could imag­ine a bunch of sec­ondary mar­kets emerg­ing. Dri­vers sig­nalling to each oth­er (fin­ger signs?) from lane to lane in an attempt to estab­lish local col­lu­sion on price (a monop­sony). Would this work? Giv­en the tem­po­rary nature of the buy­ers car­tel, it would be awful­ly hard to pun­ish defec­tion. Or would it? A pen knife scrape across the paint­work? A lit­tle nudge on the bumper-bar? In a more pos­i­tive vein, think of the deriv­a­tive pos­si­bil­i­ties. Could dri­vers buy “con­ges­tion futures” for parts or all of a toll­way? What if the author­i­ties decid­ed to set up a mar­ket for e.g. Mon­day-morn­ing or Fri­day-after­noon express lane futures? Pre­sum­ably they could con­tribute con­sid­er­ably to smooth­ing out con­ges­tion peri­ods. Thanks to “Ben Muse”: for the pointer.

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