At what price does traffic divert from toll roads to alternative routes?

Empirical evidence of toll road traffic diversion and implications for highway infrastructure privatization

From Public Works Management & Policy

Toll road programs were introduced in the USA to reduce congestion on America’s transportation network. Congestion pricing uses tolls to alter demand, using road pricing to manage congestion. Many tolls are used as a means to fund new and existing roadways and transfer control of infrastructure to private firms. This study asks important questions such as how do truckers respond to pricing signals? As price increases, how extensively do truckers divert from limited-access highways to secondary roads? At what price does this diversion impose costs on secondary highways? The article explores the elasticity of demand for truck traffic over time for an existing toll road it uses empirical data to evaluate the extent to which tolls divert traffic from existing highways to alternative routes. It concludes that further research could help determine whether or how to set tolls to foster good decisions by road users.

Abstract

Little scholarly empirical work measures truckers’ elasticity of demand for limited access toll roads. How do truckers respond to pricing signals? As price increases, how extensively do truckers divert from limited-access highways to secondary roads? At what price does this diversion impose costs on secondary highways? Using a unique data set, this article demonstrates empirically the extent to which pricing leads to diversion. Diversion is substantial, and elasticity becomes increasingly negative with higher tolls. This has significant policy implications. The diversion of large trucks probably creates an externality that, if it were priced, might cause the benefits of tolling to outweigh the costs. This diversion may have a safety cost because secondary roads are inherently less safe than limited-access divided highways. In addition, second-best truck routings may introduce costly deadweight losses to the economy, damaging interstate commerce. Profit-maximizing toll road operators might exacerbate this diversion to the detriment of public welfare.

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Article details
Swan, P., & Belzer, M. (2010). Empirical Evidence of Toll Road Traffic Diversion and Implications for Highway Infrastructure Privatization Public Works Management & Policy, 14 (4), 351-373 DOI: 10.1177/1087724X09360806

 

Tags: infrastructure finance, public—private partnerships, safety, tolling, trucking