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PROBLEM: how do you price lane capacity? Charge for it! How much? How?

Value Pricing. PROBLEM: how do you price lane capacity? Charge for it! How much? How?. 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

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PROBLEM: how do you price lane capacity? Charge for it! How much? How?

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  1. 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

  5. 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.

  6. 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

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