{"id":142,"date":"2025-06-16T14:30:56","date_gmt":"2025-06-16T18:30:56","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=142"},"modified":"2025-06-16T14:30:56","modified_gmt":"2025-06-16T18:30:56","slug":"the-price-of-congestion-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2025\/06\/16\/the-price-of-congestion-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"The Price of Congestion \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"

In the 1950s, future Nobel Prize-winning economist William Vickrey<\/span><\/a> proposed that the New York subway system increase subway fares during high-use periods and reduce fares during low-use periods. He also recommended that transit authorities impose tolls on people who use roads based on the time of day. Vickrey argued that charging different prices during different times would induce travelers to shift their schedules to times when roads were less crowded. People would also substitute into other forms of transportation, such as public transit, biking, and carpooling. Both would reduce congestion.\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Vickrey\u2019s proposal became known as congestion pricing. Though they simplify Vickrey\u2019s proposals, congestion pricing is used in Singapore, Stockholm, and London. Congestion is a classic example of what economists call an external cost. Efficient charges for the use of a network subject to congestion take into account the impact a person\u2019s trip has on other network users. It is often thought that government intervention is required to set efficient congestion prices. Sometimes, that may be true, but other times, the government may not be politically able to do so, and sometimes, it may be unnecessary.\u00a0<\/span>\u00a0<\/span><\/p>\n

A recent New York City plan would have charged cars $15 a day to enter the center of Manhattan. Critics expressed concerns that higher prices affect low-income people who can\u2019t afford it, especially suburbanites who don\u2019t have easy access to mass transit and rely on cars for their daily commute. People just outside the areas with congestion pricing express concern that they\u2019d see more traffic congestion. However, including provisions to reduce the impact on low-income drivers, such as discounts and vouchers, is not difficult. Likewise, most low-income people in New York don\u2019t own cars. Proponents point out that the Manhattan plan would reduce congestion, reduce air pollution, and raise over a billion a year, which could be used to expand mass transit options and help fund low-income vouchers.<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>Nevertheless, Governor Kathy Hochul stopped it. In 1958, Nelson Rockefeller was elected governor of New York by assuring voters that he would freeze subway fares. Charging people for what used to be free or raising the price is never politically popular. Government administration of pricing is no panacea for dealing with external costs in a democratic society. Sometimes, for-profit firms have a clear financial incentive to impose congestion pricing. Examples include electric utilities charging more for electricity during peak hours and discounting it during slack times and airlines raising fares at peak times.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

In the 1950s, future Nobel Prize-winning economist William Vickrey proposed that the New York subway system increase subway fares during high-use periods and reduce fares during low-use periods. He also recommended that transit authorities impose tolls on people who use roads based on the time of day. Vickrey argued that charging different prices during different […]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[462],"tags":[1372,1380,1381,1282,1383,900,1377,1288,1384,1379,1376,1375,1378,1374,1382,1373],"class_list":["post-142","post","type-post","status-publish","format-standard","hentry","category-microeconomics","tag-congestion-pricing","tag-economic-incentives","tag-environmental-policy","tag-externalities","tag-governor-kathy-hochul","tag-new-york-city","tag-peak-pricing","tag-political-economy","tag-pricing-strategy","tag-public-transit","tag-road-tolls","tag-subway-fares","tag-traffic-congestion","tag-transportation-policy","tag-urban-planning","tag-william-vickrey"],"yoast_head":"\nThe Price of Congestion \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/06\/16\/the-price-of-congestion-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Price of Congestion \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"In the 1950s, future Nobel Prize-winning economist William Vickrey proposed that the New York subway system increase subway fares during high-use periods and reduce fares during low-use periods. 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