If Congestion Pricing Is So Great, Why Don't Businesses Do It?

Congestion pricing and/or express tolling is one of those things that seemingly all men of good will--i.e., liberal, conservative, and libertarian policy wonks living in a handful of coastal cities--can agree about.  Most non-wonks seem to hate it.  But it promotes environmental goals and controls negative traffic externalities by using prices.  What's not to love?

Tim Lee, a libertarian wonk in good standing, takes the bold, contrarian stance:

A few days ago I happened to stop by the local supermarket during the post-work rush. When I was ready to check out all the regular lanes had long lines. Ordinarily, I wouldn't mind waiting a few minutes, but on this particular evening I had dinner plans I couldn't be late for. So I shelled out the extra $6 for the express lane so I could skip the lines.

Perceptive readers will surmise that I made up the previous paragraph. In reality, grocery stores don't impose congestion charges on their customers. Nor do many other types of private businesses. I don't think I've ever had a customer support line offer to expedite my call for a fee. I've heard you can get a table faster at some restaurants by bribing the Maitre d', but I've never seen a restaurant formalize the practice. Generally speaking, when businesses experience temporary spikes in demand, they serve customers on a first-come-first-serve basis; they don't auction off the temporarily scarce capacity to the highest bidder.

These examples came to mind as I was reading the comments on my recent article about congestion pricing of the highways. One of the striking things about the congestion pricing debate is the stark divide between elites and the general public. Prominent intellectuals from across the political spectrum--from free-market transportation experts to left-wing bloggers are supportive of the idea. In contrast, the readership of Ars Technica, like voters generally, is overwhelmingly opposed. And their criticisms were not limited to the privacy issues that were the focus of my article.

Many supporters of congestion pricing chalk this up to voter ignorance. They assume that people will like congestion pricing once they have a chance to try it. But the supermarket example should make us skeptical of that conclusion. The grocery business is an intensely competitive one. If it were true that people could be won over to this kind of scheme once they had a chance to try it, you'd expect some entrepreneurial grocery store owner to give it a try. Yet I've lived in half a dozen different metropolitan areas and I've never seen a supermarket that utilized congestion pricing on its checkout lanes.

This is a strong empirical argument, and Tim goes on to outline reasons he thinks that we don't see congestion pricing in grocery stores.  But let me counter with my own example:  I do pay to cut in line when I use another form of transportation, namely flying.  When I fly Southwest, I buy the pricier tickets that put you at the head of the line (worth it, because Southwest's seating is first-come, first-served).  When I fly out of a very congested airport like Dulles, I will occasionally pay the $20-40 to go through the shorter first class security line, and jump into an earlier boarding group.  And wherever possible, I fly American Airlines, where I have Gold frequent flyer status.  Why?  It lets me jump the lines.

I also pay more to fly at the "peak" hours business travelers prefer, rather than getting up at 6 am on Saturday morning.

Now, I'm not particularly typical: I generally travel several times a month for business.  But you could argue that frequent fliers like me are more like commuters than the tourists who fly once or twice a year.  There is at least some willingness to pay private market actors in order to avoid congestion.

You can argue that this isn't a good example: that the airlines are a weird, very heavily regulated industry, and that many people react negatively to all the fees they charge.  I might even agree.  But it isn't true that we never observe such pricing to get around lines.  Amusement parks also do it, with super-pricey premium passes that let you cut to the front.  In fact, you could argue that these businesses are a better example than groceries, where even in my fairly dense and grocery-poor neighborhood, lines rarely make me wait longer than five minutes, ten at the outside.  At busy airports and amusement lines, on the other hand, half an hour to an our is not rare.  And those businesses have responded by coming up with ways for at least a few customers to pay to jump the queue.

But that brings us to the heart of the populist argument against congestion pricing, and even express toll lanes, and I think ultimately supports Tim's argument that this is never going to be democratically popular: most people don't pay.  And they tend to resent the people who do.  It is not an accident that congestion pricing is a system most beloved of people who are a) relatively affluent and/or b) don't drive to work.  This tells us empirically why congestion pricing is unlikely to ever get enough political support to be implemented in America.  But maybe it also tells us, maybe, why it shouldn't be implemented.  Who are we to tell people that they ought to prefer prices to queuing?