Differentiated Road Pricing, Express Lanes and Carpools: Exploiting Heterogeneous Preferences in Policy Design

44 Pages Posted: 27 Mar 2006

See all articles by Kenneth A. Small

Kenneth A. Small

University of California, Irvine - Department of Economics

Clifford Winston

AEI-Brookings Joint Center for Regulatory Studies

Jia Yan

Washington State University

Date Written: March 2006

Abstract

In the face of rising congestion on the nation's road system, policymakers have explored ways to reduce travel delays. One approach has been to allocate reserved lanes - called high-occupancy-vehicle (HOV) lanes - to vehicles carrying two or more people. A recent innovation is to allow solo drivers to use the HOV lanes if they pay a toll. These so-called high-occupancy-toll (HOT) lanes can be found in Los Angeles, San Diego, Houston, and Minneapolis and are under consideration in several other urban areas. In this paper, we argue that HOV and HOT lanes sacrifice efficiency by failing to price all lanes. Moreover, we show that it is possible to set prices on all lanes that improve on the efficiency of HOV and HOT policies and by catering to motorists' varying preferences, can meet the test of political acceptability.

Keywords: HOV lanes, toll lanes, travel delays, policymakers

JEL Classification: H00

Suggested Citation

Small, Kenneth A. and Winston, Clifford and Yan, Jia, Differentiated Road Pricing, Express Lanes and Carpools: Exploiting Heterogeneous Preferences in Policy Design (March 2006). AEI-Brookings Joint Center Working Paper No. 06-06-02. Available at SSRN: https://ssrn.com/abstract=893163 or http://dx.doi.org/10.2139/ssrn.893163

Kenneth A. Small (Contact Author)

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
714-824-5658 (Phone)
714-824-2182 (Fax)

Clifford Winston

AEI-Brookings Joint Center for Regulatory Studies ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

Jia Yan

Washington State University ( email )

P.O. Box 646210
Hulbert Hall 101
Pullman, WA 99164-6210
United States

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