Congestion Tolling at the Supermarket

To help explain why toll lanes might not be the great solu­tion to traffic con­ges­tion many believe them to be, Timothy Lee goes to an unex­pec­ted place to draw par­al­lels: your loc­al super­mar­ket.

Super­mar­kets are a good ana­logy, sug­gests Lee, because they oper­ate in a free mar­ket, are ruth­lessly effi­cient, intensely com­pet­it­ive, and employ ‘lanes’ (check­out queues)… but they don’t use con­ges­tion pri­cing. The reas­ons why they don’t, he says, can also be applied to traffic con­ges­tion:

First, we have strong and soph­ist­ic­ated social norms, cul­tiv­ated since we were young chil­dren, for wait­ing in lines. This bit of self-organ­iz­a­tion is extremely import­ant for the smooth func­tion­ing of civil soci­ety. We see wait­ing your turn as an oblig­a­tion we have to one anoth­er, and there­fore not as an oblig­a­tion that a super­mar­ket or trans­port­a­tion agency can waive in exchange for a cash pay­ment. I sus­pect cus­tom­ers would see people using a tolled check­out lane as break­ing an impli­cit social con­tract.

More import­antly, cus­tom­ers would be sus­pi­cious that the super­mar­ket was delib­er­ately under-staff­ing the free lanes to gin up demand for the express ones. […] In the low-mar­gin gro­cery busi­ness, it would be a pretty effect­ive way for a man­ager to pump up his short-term profits, while the long-term harm to the store’s repu­ta­tion would be hard […] to quanti­fy.

This lat­ter con­cern seems par­tic­u­larly rel­ev­ant to the case of toll roads. The rev­en­ue-max­im­iz­ing pri­cing sched­ule is not the same as the con­ges­tion-min­im­iz­ing sched­ule. An effect­ive con­ges­tion-pri­cing scheme might gen­er­ate rel­at­ively little rev­en­ue if people shift their driv­ing to off-peak times (which is the whole point). The oper­at­or of a mono­pol­ist­ic toll road will face a con­stant tempta­tion to boost rev­en­ues by lim­it­ing through­put on free lanes and jack­ing up the off-peak toll rates. The wide­spread voter per­cep­tion that they’ve “already paid for” many tolled roads through oth­er taxes isn’t exactly right as a mat­ter of fisc­al policy, but I think it’s based on a sound intu­ition: there’s no reas­on to think the polit­ic­al pro­cess will set tolls in a way that’s either fair or eco­nom­ic­ally effi­cient.