Road Pricing and Compensation for Delay

Abstract

The equity issues facing congestion pricing are an impediment to its adoption. A criticism that gets very little attention is that not only does a toll road enable some to buy their way out of congestion, under certain circumstances such as a queue jumper, they do so at the expense of others - that is, they may make others wait longer so that they can avoid delay, in both cases of take-away capacity and additional capacity. They, along with the toll road authority, are in a sense stealing time from those who don't pay. What to do with the revenue from congestion pricing is a critical question that needs to be answered before toll roads will become widely adopted. This paper investigates the issue of compensation and several possible alternatives. The equity and efficiency problem of conventional (uncompensated) congestion pricing is outlined. Then several of the previous alternatives are discussed and developed. A new compensation mechanism is suggested, called the "delayer pays" principle. This principle ensures that those who are undelayed but delay others pay a toll to compensate those who are delayed. Issues of imperfect information and gaming the system are addressed. Such a system can potentially eliminate some of the disadvantages of congestion pricing while ensuring that the money stays within the transportation sector, and is returned to those delayed.