Toll Roads at Last?

As I sat in another unexpected midmorning traffic jam in Northern Virginia yesterday, my mind recalled this article from the Washington Post that describes future plans to build a network of private toll roads in the DC area. We'll see if the whole thing ever actually materializes.

Pete Boettke has a brief comment on some of the Economics 101 of private toll roads in DC.

Brad Warbiany (mail) (www):
When roads are privately funded, they are placed in an area that the market determines are best needed. Thus, they earn money.

When they are publicly funded, they are placed in an area that the politicians determine are most needed. Thus, they buy votes.
12.14.2005 3:45pm
Splunge (mail):
Eh, what you need first is some efficient system of micropayments, so that you can easily pay an extra dollar or so to get to work a smidge faster by using the higher-cost lower-traffic lane, and you can make that decision on the spot, as soon as you see how the traffic is, and after you check your Blackberry for the morning's appointments. The existing system of an entire road being free or pay, and collecting a fixed (often significant in SoCal) chunk of money via a toll booth is just medieval in its clunkiness and inefficiency. The technology exists (RFID chips and ACH transfers) -- what are we waiting for? Seamless 24/7 rush hours jams, I'm guessing...
12.14.2005 4:14pm
llamasex (mail) (www):
Brad actually toll roads will be built not where they are needed, but where they are DEMANDED, and demand is the willingness and THE ABILITY to pay.

That ability part doesn't correspond to need
12.14.2005 4:26pm
There are fast toll payment systems in use in different parts of the country. Souldn't be a big issue.
12.14.2005 4:30pm
The criticism of "medieval" toll technology is unfair. The typical medieval toll was quite flexible and adaptive, since the guy with the big axe could easily practice price-discrimination, set higher prices at times of greater traffic, or even walk away and make the road free when traffic was low.

OTH, medieval toll technology was vulnerable to "free riding" by people with unusually fast horses.
12.14.2005 4:49pm
David Sucher (mail) (www):
I think it would be naive to imagine that toll roads could escape politics. The principle issue is eminent domain. It is inconceivable to me that government will (or will be allowed (by the Courts and The People) to delegate the power of condemnation to a private party. But it is not possible to assemble an urban transportation corridor without eminent domain. Therefore government will have to take the lead in creating the context within which a provide road can be built and operated. It may very well be a good idea to have some sort of "congestion pricing" of highways, but such systems, I believe, can only come into existence as a response to a governmental initiative, which might dilute the ideological fervor behind this whole matter i.e. toll roads may be a good idea but let's not kid ourselves that they are bold free-market capitalism at work as they cannot exist without the police power to take someone's land.
12.14.2005 6:33pm
Gordon (mail):
The easy way around the Kelo problem is for private property rights advocates to accept over 100 years of jurisprudence indicating that transportation and utility corridors are "public" enough to allow use of condemnation to assemble them. This is not some new outrage perpetrated by the grasping bureaucrats of the late 20th century - it's a time-honored American tradition.
12.14.2005 6:39pm
Gordon (mail):
We are having some interesting discussions here in Oregon about the merits of toll roads, due to the fact that voters have rejected attempts to increase the gas tax, resulting in a woefully underfunded state transportation program.

The interesting economic question here is that public money is still needed in part to build the toll roadways. Why? Because traffic congestion isn't so bad here. Therefore, a high enough toll to fully pay for the new facility isn't feasible, because it won't bring enough drivers away from the moderately congested free alternatives.

So, a $100 million public investment in a "freeway" becomes a $30 million investment in a "toll road."

The other arguments against toll roads are the usual "Lexus Lanes" crap, usually from the same people unwilling to vote to raise their gas taxes in the alternative.
12.14.2005 6:43pm
Visitor Again:
Yet another step in the drive to extend different levels of public services to different economic classes. We saw it in the extension of government voucher subsidies to those able to pay extra for their children to attend private schools. Then toll roads. What's next? The guaranteed two-minute response by elite police and fire department squads for those willing to pay a premium, catch-as-catch-can for the rest? Potholes plugged daily for neighborhoods that pay a fee, only every five years for the rest? Sewers and street drainage systems that work for those who can pay more, clogged works for the rest? First class subway cars for those willing to pay extra to avoid the hoi-palloi, the stench of the masses for the rest?
12.14.2005 7:43pm
Bob Smith (mail):
I've never understood the Eastern fetish for toll roads. The toll booths themselves muck up traffic and increase both pollution and fuel use. Say what you want about the infamous LA traffic, but at least it *moves*. I've been stuck in traffic for more than an hour on the Masspike waiting to get through the toll booths, which never happens in LA or SF Bay Area absent a bad accident.
12.14.2005 9:07pm
byomtov (mail):
When roads are privately funded, they are placed in an area that the market determines are best needed. Thus, they earn money.

When they are publicly funded, they are placed in an area that the politicians determine are most needed. Thus, they buy votes.

I do not think you can simultaneously argue:

a) Toll roads are needed because existing roads are jammed


b) Toll roads are needed because government roads are not built where they are needed
12.14.2005 9:30pm
Jeroen Wenting (mail):
Toll roads are just another gun in the government's arsenal to reduce the mobility of the population.
By charging people for travelling specific areas or routes they get prevented from travelling there almost as efficiently as putting up an armed guard who checks if they have valid business in the area (with the added benefit that the toll is direct income while the armed guard costs money).

While they may sell the franchise to a 3rd party, that 3rd party will still have to pay the government for the privilege of collecting the tolls and therefore will have a defacto minimum price to charge which is determined by that government (franchise price+operations cost / number of expected vehicles).

And yes, you can argue that toll roads are needed because both existing roads are jammed and in the wrong place.
Many people would take more economical routes if only they existed.
For example until recently I had to detour 10km (or 20% of my trip) to get to my office. It took the construction of a new highway exit and road to change that. In this instance the government did it, but only to make easy access to a new industrial estate where they get large amounts of money renting out the land to businesses.
12.15.2005 6:01am
Visitor Again--The issue here is private toll roads, not government toll roads (we can argue what role the government has in land and revenue re: these privately owned and operated roads in another post). And there is a benefit to all commuters, even if they choose not to pay to use a toll road. Some people will pay; that's been proven in the DC area by the private Dulles Greenway, and use of this road by some removes those cars from the other free roads in the area.
12.15.2005 11:16am
Visitor Again:

No, the issue is letting public services become private so that they are not distributed equally but on the basis of wealth.
12.15.2005 11:37am
It looks like the professor is now a fan of using eminent domain taking private property to give to private parties, at least when it makes his life more convenient.
12.15.2005 12:00pm
Anon1ms (mail):
Given the enormous costs of roadbuilding, I seriously doubt that there will be "private" toll roads built anytime soon. If there are, they will be along the lines of many "private" sports stadiums -- public funding and private profits.
12.15.2005 12:10pm
Bruce Wilder (www):
We pay for road construction with some combination of gas taxes and property taxes, which actually makes a lot of economic sense.

Congestion pricing makes sense, in situations in which it is simply not possible to relieve the congestion. Implementing congestion pricing by way of a *private* tollroad, though, carries some significant problems: the private investors will have to be assured that the congestion problem will not go away, depriving them of the ability to collect a profitable toll. In other words, government would not only have to provide eminent domain authority to get the private tollway builders a right-of-way, government would have to undertake NOT to take other measures to relieve congestion. This happened in Orange Country's case, and the State ended up having to buy the tollway, in order to reclaim the ability to do sensible traffic management and road planning.
12.15.2005 3:21pm
spencere (mail):
Economics does not claim that private individuals make better decisions then public individuals. What economics
claims is the private markets end up with better results because the markets cause the private decisions that were bad to fail. In the case of roads this would require multiple private investors to build different roads to see which ones turned out to be profitable. Since no one is proposing this, how can you assure that the decision of an individual investor given monopoly power to build a given road can make a better decision then a public official? Yes, the world is full of bad decisions by public officials. But it is also full of bad decisions by private investors.
12.15.2005 4:21pm
spencere (mail):
Brian Warliany can you provide one bit of factual evidence to support your claims about the difference between public and private roads?
12.15.2005 4:23pm