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Such an arrangement has certain advantages compared to other proposed methods: the stickers are easy to use; the system does not require a large initial investment; and its overall costs are estimated to be low. On the other hand, the more it allowed for differential pricing, the more complicated it would be to administer. Also, enforcement, via monitoring of moving vehicles, would pose difficulties. (With 22 points of entry into its priced zone, Singapore found that one or two extra policemen were required at each point, but this was for a simple two-sticker [daily and monthly] system.)
Another method already familiar to drivers is the use of conventional toll booths. In order to enter a priced zone, vehicles have to come to a stop and pay a fee. Disadvantages are the delays associated with stopping and the large initial investment for toll plazas. There are also difficulties with charging by time-of-day: drivers anticipating an impending decrease in charges might slow down or stop and wait, thus causing congestion; but if this obstacle is met by gradual changes in the toll, administration and payment of tolls become cumbersome.
A modified toll-booth system could overcome this problem by using magnetic cards and monthly billing, much like telephone or utility bills. But the system would still be saddled with high initial capital costs and the need for drivers to stop, both disadvantages counting heavily against its feasibility for a modern urban expressway system with a huge number of entry points.
Less familiar to the public but well analyzed by those who have studied road pricing are various metering options by which charges can be applied for driving at specific times and locations. These include on-vehicle meters and Automatic Vehicle Identification systems. On-vehicle meters operate much like a taxi meter. One type of device would require the driver to activate the meter upon entering a priced zone by “plugging in” a timer purchased in advance and good for so many hours of peak-time travel. Another type would be activated automatically as the driver entered a priced zone, via a signal from an electronic device embedded in the road. Payment would be similar to the system used for metered mail, with the meter periodically being presented for payment and adjustment. In both systems, enforcement could be effected through pilot lights on the outside of the car indicating that the meter is running.
The plug-in meters pose potential safety problems because they would have to be activated by drivers of moving vehicles. And while the automatically activated meters have the major advantage of allowing pricing flexibility along one continuous trip, the method of payment would be inconvenient for the road user and there is a potential problem with fraud because of the possibility of drivers tampering with the meters.
Automatic Vehicle Identification (AVI) systems use off-vehicle monitors at pricing points to identify cars as they enter and leave zones. A central computer records use by vehicle, time, and location. Itemized billing can then be issued on a monthly basis. Technologies pro- posed include roadside camera scanning of optical windshield labels (such a system has been used on railroad cars), laser beams, microwaves, and scanners embedded in the road to monitor low-frequency signaling devices mounted on the underside of automobiles.
DRIVING WITH AVI
The latter AVI system is considered the most promising technology for congestion pricing. Electrical induction loops in the road would pick up a signal from a small radio transmitter placed underneath the vehicle. The signal would give the vehicle identification code and this, along with the time and location, would be transmitted to a computer and user charges run up on a monthly basis. It would thus permit instantaneous identification and charging of moving vehicles without disrupting the flow of traffic and with minimal involvement bythe user once the transmitter is installed.
Although there have been no tests to evaluate a full-blown AVI system in use, the technology has worked well for automatic truck and bus toll collection in New York and New Jersey. And tests
have shown this AVI system to be highly reliable and unaffected by weather conditions, lateral movement of vehicles across lanes, and other circumstances that can impair some types of metering. Because AVI would allow for many variations in rates by time and location, it is superior to stickers, toll collection, or other methods of charging at fixed rates. Aside from the advantages, from the point of view of pricing theory, of being able to relate charges to different conditions, there is another plus: as economist Ward Elliott, of the Rose Institute of State and Local Government of Clarement McKenna College, has pointed out, “Many regular road users, if they have to pay a congestion charge, would prefer a precise one to a rough one for the same reasons that they prefer itemized tax deductions to the standard deduction. Greater precision could save them money with lower charges for near-peak use, minor direction changes, shorter or more peripheral trips, separate charges for morning and afternoon peaks, and so on.”
The economics of AVI compare favorably to other pricing methods and suggest a very positive ratio of benefits to costs. Prototype signal units, available from several manufacturers, have cost from $75 to $120. Unit costs in large-scale production have been estimated at $25 to $45. The cost could be charged directly to motorists at the time of installation or recovered from revenues.
A scanner system costs about $32,000 per four-lane pricing point. Overall, an extensive AVI network of 200 pricing points serving 500,000 vehicles would entail an initial investment of perhaps $60 dollars per car, with operating costs of five cents per vehicle trip. The exact structure of charges would depend on demand patterns in specific locations, but the optimal price would undoubtedly exceed operating costs and should yield a reasonable return on the capital investment.
Implementing AVI would involve some administrative and enforcement problems, mainly in providing for road use by unequipped vehicles and in broadcasting the rate structure. Signal units should be readily available, perhaps at service stations, so that newcomers to the area could have one installed without delay and worn-out units could be easily replaced. A supplementary sticker system could handle out-of-area motorists, infrequent drivers, and those who, for reasons of privacy, preferred not to have their trips recorded on a computer. Rate schedules could be published in newspapers and posted along routes.
Sudden changes in the rate structure at peak hours would have to be avoided, or congestion would simply shift to the times just before the price goes up. Similarly, the value of efficient pricing on expressways would be limited if alternate routes on city streets remained unpriced. (An excessive diversion of traffic to surface routes might actually decrease the overall efficiency of the transit network.) The most practical solution in many cases would be to limit peak-hour street access to vehicles bearing specially coded stickers. This was the method successfully used in Singapore and could be price-coordinated with an AVI expressway system.
In no case would these technical details surpass the complexity of operating a rapid transit system, rationing roadway use, or adopting other bureaucratic approaches being seriously advanced today. AS pointed out by economist William Vickrey, who kicked off the debate on road pricing back in 1963 with his discussion in the American Economic Review, the obstacles to road pricing raised by skeptics “can be overcome by the exercise of a modicum of ingenuity such as would be normal for those genuinely interested in developing the possibilities . . .rather than merely defending the status quo.”