Congestion Pricing

Back home on vacation this weekend, my brother was telling me about paying up to $30 one-way to drive Interstate 66 inside the DC Beltway. One the one hand, the pricing (which varies with traffic) is outrageous. On the other hand, people will pay it. My brother, coming off a 12- or 16- or 20-hour hospital shift as a medical resident, will pay whatever he has to pay to get home and sleep.

The latest round of self-driving car projections offer conflicting predictions about the effect self-driving cars will have on congestion. Self-driving cars should lower the psychological costs of vehicular transportation, which should in turn encourage demand and ultimately lead to more congestion.

On the other hand, self-driving cars may be more efficient drivers, and will encourage ride-sharing. Ride-sharing, in turn, has the potential to reduce parking needs and vehicle sizes. All of this should lead to less congestion.

Where all of this ultimately shakes out is to be seen, but congestion pricing has potential to reduce a lot of the zero-sum friction. With a few exceptions, most roads are free to use, paid for by tax dollars. Moving to a world in which we pay to use roads will lower our tax burdens, allocate space on the road more efficiently, and hopefully reduce congestion.

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