Monday, August 19, 2013

Hot or Not? by Janson & Levinson

HOT or Not?
Driver Elasticity to Price on the MnPASS HOT Lanes

Michael Janson and David Levinson

"The Minnesota Department of Transportation (MnDOT) has added MnPASS High Occupancy Toll (HOT) lanes on two freeway corridors. While not the fi rst HOT lanes in the country, the MnPASS lanes are the fi rst implementation of road pricing in Minnesota and possess a dynamic pricing schedule. Tolls charged to single occupancy vehicles (SOVs) are adjusted every three minutes according to HOT lane vehicle density. Given the infancy of systems like MnPASS, questions remain about drivers' responses to toll prices. Three fi eld experiments were conducted on the corridors during which prices were changed. Data from the fi eld experiments as well as two years of toll and traffi c data were analyzed to measure driver responses to pricing changes. Driver elasticity to price was positive with magnitudes less than 1.0. This positive relationship between price and demand is in contrast with the previously held belief that raising the price would discourage demand. In addition, drivers consistently paid between approximately $60-120 per hour of travel time savings, much higher than the average value of time. Reasoning for these results is discussed as well as the implications these results have on the pricing of HOT lanes."

Also see the following article on The Atlantic Cities:
HOT Lanes Are Even More Popular When They're Expensive

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