Credible commitment and congestion pricing

Transportation analysts frequently assert that congestion pricing’s political obstacles can be overcome through astute use of the toll revenue pricing generates. Such “revenue recycling,” however, implies that the collectors of the toll revenue will not be its final recipients, meaning that any revenue recipient must believe that the revenue collector will honor promises to deliver the money. This raises the potential for credible commitment problems. Promises to spend revenue can solve one political problem, because revenue is an easy benefit to understand, but create another one, because revenue is easy to divert. Revenue recycling may therefore not be a promising way to build political support for congestion pricing. We highlight the role commitment problems have played efforts to implement congestion pricing, using examples from around the world and then focusing on California. Because congestion reduction is a more certain benefit than any particular use of the toll revenue, demonstration projects, rather than revenue promises, will be key to pricing’s political success.

[1]  Budget Snapshot.  Superior Court of California , 2014 .

[2]  M. Rothbart,et al.  On the confirmability and disconfirmability of trait concepts. , 1986 .

[3]  Donald J. Schepker,et al.  The Many Futures of Contracts , 2014 .

[4]  T. Richardson,et al.  Building legitimacy for risky policies: The cost of avoiding conflict in Stockholm , 2009 .

[5]  Dino Falaschetti,et al.  Constraining Leviathan , 2001 .

[6]  D. Collard,et al.  Trust : making and breaking cooperative relations , 1989 .

[7]  Karen Bonanno.  Succession Planning: Passing the Baton , 2005 .

[8]  John M. Quigley,et al.  Political and Public Acceptability of Congestion Pricing: Ideology and Self Interest , 2009 .

[9]  K. Kockelman,et al.  Credit-based congestion pricing: a policy proposal and the public’s response ☆ , 2005 .

[10]  Ken Livingstone,et al.  The challenge of driving through change: Introducing congestion charging in central London , 2004 .

[11]  Andrew Odlyzko,et al.  Too expensive to meter: the influence of transaction costs in transportation and communication , 2008, Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences.

[12]  Stephen Ison,et al.  Implementing Road User Charging: The Lessons Learnt from Hong Kong, Cambridge and Central London , 2005 .

[13]  G. Giuliano.  An assessment of the political acceptability of congestion pricing , 1992 .

[14]  Barry R. Weingast,et al.  The Industrial Organization of Congress; or, Why Legislatures, Like Firms, Are Not Organized as Markets , 1988, Journal of Political Economy.

[15]  Søren L. Buhl,et al.  Underestimating Costs in Public Works Projects: Error or Lie? , 2002, 1303.6604.

[16]  Robert Puentes,et al.  Fueling Transportation Finance: A Primer on the Gas Tax , 2003 .

[17]  M. Batey.  Manchester Evening News , 2012 .

[18]  O. Williamson.  Public and Private Bureaucracies: A Transaction Cost Economics Perspective , 1999 .

[19]  J. Viegas.  Making urban road pricing acceptable and effective: searching for quality and equity in urban mobility , 2001 .

[20]  K. Kockelman,et al.  Credit-Based Congestion Pricing: Travel, Land Value, and Welfare Impacts , 2003 .

[21]  Marc J. Hetherington,et al.  The Political Relevance of Political Trust , 1998, American Political Science Review.

[22]  Paul Slovic,et al.  Perceived risk, trust, and democracy , 1993 .

[23]  W. Vickrey.  My innovative failures in economics , 1993 .

[24]  T. D. Hau.  Developments in transport policy - electronic road pricing - developments in Hong Kong 1983-1989 , 1990 .

[25]  D. Kenyon,et al.  Theories of interjurisdictional competition , 1997 .

[26]  P. Dasgupta.  Trust as a commodity , 1988 .

[27]  O. Williamson.  Credible Commitments: Using Hostages to Support Exchange , 1983 .

[28]  O. Williamson.  Calculativeness, Trust, and Economic Organization , 1993, The Journal of Law and Economics.

[29]  K. Small.  Using the revenues from congestion pricing , 1992 .

[30]  Barry R. Weingast.  The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development , 1995 .

[31]  P. Goodwin.  THE "RULE OF THREE": A POSSIBLE SOLUTION TO THE POLITICAL PROBLEM OF COMPETING OBJECTIVES FOR ROAD PRICING. IN: URBAN TRANSPORT , 2003 .

[32]  Benjamin I. Page,et al.  Effects of Public Opinion on Policy , 1983, American Political Science Review.

[33]  Georgina Santos,et al.  London Congestion Charging , 2008, Brookings-Wharton Papers on Urban Affairs.

[34]  T. Cowen,et al.  Credibility may require discretion, not rules , 2000 .

[35]  R. Coase.  The Nature of the Firm , 1937 .

[36]  B. Schaller.  New York City's Congestion Pricing Experience and Implications for Road Pricing Acceptance in the United States , 2010 .

[37]  K. Brundell-Freij,et al.  The development of public attitudes towards the Stockholm congestion trial , 2009 .

[38]  L. Steg,et al.  Explaining differences in acceptability before and acceptance after the implementation of a congestion charge in Stockholm , 2010 .

[39]  M. Grieco,et al.  Edinburgh and the Politics of Congestion Charging: Negotiating Road User Charging with Affected Publics , 2005 .

[40]  Elisa Barbour.  State-Local Fiscal Conflicts in California: From Proposition 13 to Proposition 1A , 2007 .

[41]  B. Taylor,et al.  The Thin Red Line , 2009 .

[42]  S. Borins,et al.  Electronic road pricing: An idea whose time may never come , 1988 .

[43]  David A. King.  Political Calculus of Congestion Pricing , 2007 .

[44]  Tom Rye,et al.  Public Acceptability of Road User Charging: The Case of Edinburgh and the 2005 Referendum , 2007 .

[45]  Daniel B. Klein,et al.  Hot Lanes: Introducing Congestion-Pricing One Lane at a Time , 1997 .

[46]  J. Elíasson,et al.  The unexpected "yes!" : Explanatory factors behind the positive attitudes to congestion charges in Stockholm , 2011 .