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Value Pricing: Maximizing Lane Capacity Efficiency

Learn how to price lane capacity effectively using value pricing strategies for optimal resource allocation and congestion reduction. Explore differential pricing examples in various sectors like airlines, electricity, and restaurants to motivate demand shifts. Discover implementation insights and pilot programs to improve transportation infrastructure efficiency.

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Value Pricing: Maximizing Lane Capacity Efficiency

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  1. Value Pricing PROBLEM: how do you price lane capacity? Charge for it! How much? How?

  2. Differential pricing occurs in sectors • Airline ticket prices: • function of remaining seats to be sold • Electricity: • time of day (afternoon peak higher than overnight) • Restaurants • Early bird specials for seniors Why not for mass transit and highways??? • Transit: • time of day (cheaper during rush hours!!???)

  3. Objective of Value Pricing • Influence the “user optimal” objective function to yield a system optimal solution. • From a system optimal perspective (minimize overall “congestion”: minimize sum of “delay”) • lots of unused capacity in other locations at congested times and all locations at uncongested times • so.. • motivate the shift of some fixed-location demand to uncongested times • motivate the shift to uncongested locations at congested times • Motivation: Price • RPA Congestion Charging & Technology, 2007 link

  4. Example: Rt1 in the Princeton-Trenton Corridor

  5. Issues with value pricing • How do you charge? • Where does the money go? • Other approaches?? • What about creating a market for roadway capacity? • Ration capacity equitably • Create a “black market” for the ration coupons.

  6. Value Pricing Implementations • London congestion Zone • Description: link • Latest news: link • New York Congestion charge • Somewhat original source for the idea, good analysis: Jeff Zupan, 2003, RRPA: link plus follow-up • Dies in April 2008 link • In San Francisco? link • Title 23 tolling and pricing programs and provisions. link • Current programs • Value Pricing Pilot Program • Express Lanes Demonstration Program • HOV Facilities • Interstate System Reconstruction & Rehabilitation Pilot Program • Interstate System Construction Toll Pilot Program • Title 23 United States Code Section 129 Toll Agreements • Toll Credit for Non-Federal Share, Section 1905 of SAFETEA-LU

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