1. PROBLEM: how do you price lane capacity?
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

6. 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.

7. 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