More On Pricing To Allocate Network Resources

Stephen Karlson at Cold Spring Shops picked up on the connection between auctioning air time slots and paying to cut in line. Very cool.

The most direct link between those two ideas is another proposal from my former colleague, and Reason’s founder, Bob Poole. Bob has long been an advocate for time slot auctions, the commercialization of the air traffic management function, and privatization of airport gates instead of municipal allocation. BTW, I should mention that in one of the comments below Barry Posner points out that such non-market controls over slots raise entry barriers and decrease the potential competition in industries with these non-market controls.

Anyway, Bob has a great idea for creating value for people, revenue for highway managers, and reducing congestion: operate HOV lanes as HOT, high occupancy toll, lanes. It goes like this: if your vehicle has multiple passengers you can use the lane for free. If you are alone in the vehicle you have to pay a toll to use the lane.

Think of how valuable this would be for someone late to a meeting, late to pick up the kids from soccer practice or daycare (especially daycare, where they charge you a hefty fee if you’re late), and so on. Bob recently co-authored a study on the viability of implementing HOT lanes,, and the potential value creation therein.

I’m happy to let people barge in line if they are willing to pay. People who “own” the line should be, too.

2 thoughts on “More On Pricing To Allocate Network Resources

  1. Thanks for the suggestion. The analogy between Six Flags and HOT lanes came up in yesterday’s seminar. The reference will help. The paper itself is due for presentation at the Midwest in Chicago.

  2. I used to drive from Boston to Bridgeport, CT a lot during the 80’s. At that time, there were two ways to get from I-84 West to I-91 South. One was free, but a bit longer distance, more traffic and a tough interchange. One was shorter, easy interchange and a 25 cent toll. I always took the toll road. There was never any traffic, and my guess is that I shaved five minutes off my drive. I was always amazed at how many people didn’t take this route.

    Now that the toll is gone and the bridge is the preferred interchange, it’s always backed up.

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