Financing Transportation Networks

Financing Transportation Networks

Transport Economics, Management and Policy series

David M. Levinson

Pollution, alternative fuels, congestion, intelligent transportation systems, and the shift from construction to maintenance all call for a reconsideration of the existing highway revenue mechanisms, especially the gas tax. David Levinson explores the fundamental theoretical basis of highway finance, in particular the use of tolls, and supports that theory with empirical evidence. The author examines highway finance from the perspective of individual jurisdictions and travellers, and considers their interactions rather than specifying a single optimal solution. Congestion pricing has long been a goal of transportation economists, who believe it will result in a more efficient use of resources. Levinson argues that if the governance were to become more decentralized, and collection costs continue to drop, tolls could return to prominence as the preferred means of financing roads for both local and intercity travel. An approach that creates the local winners necessary to implement road pricing is required before it can be expected to become widespread.

Chapter 12: Deploying Electronic Tolls

David M. Levinson

Subjects: economics and finance, public finance, transport, environment, transport, urban and regional studies, transport


INTRODUCTION Electronic toll collection (ETC) systems save bridge, tunnel, and turnpike operators’ staffing costs while cutting delay for travelers. However, such systems are not yet ubiquitous, and not all users buy into the system. There is a lag both on the part of toll collectors, who must become familiar with the technology, and users, who must expend some effort to obtain the transponder and establish accounts. To accelerate deployment, some portion of the benefits could be returned to users in the form of a discount. The intent of this chapter is to inform decisions that tolling agencies must make regarding discounting tolls and dedicating lanes to ETC. This chapter therefore considers the speed with which lanes should be converted to ETC and what discount for using ETC would be socially optimal.’ A model for dynamic optimization over a wide choice set must be developed. This model will depend on what share of the initial reluctance to switch to electronic tolls is fixed by the individual, what share depends on exposure, and what share is simply random. An agency’s decision to deploy ETC lanes in one year will affect the market conditions it faces in the next. This chapter begins by discussing deployment theory and the interrelationship of technology and demand. A dynamic payment choice model describing how users choose between manual and electronic tolls is proposed. The benefits and costs to society and users’ payment choice, which vary with demand and the number of ETC lanes, need to be determined...

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