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Economic Perspectives, Vol. 31, 2nd, 2007
Transforming Payment Choices by Doubling Fees on the Illinois Tollway
New technologies, such as electronic payments, offer the possibility of innovative remedies to congestion problems facing cities throughout the United States. However, the implementation of such remedies involves a number of difficult economic and political challenges. Indeed, successful implementation of technology-based policies depends critically on devising optimal pricing schemes taking into account network adoption dynamics. It also depends on consumer acceptance of the technology itself. Notably, prompting the switch to electronic payments raises many of the same challenges as the more radical congestion relief initiatives, such as variable pricing and transition to private ownership of roads. In this article, the authors study the effectiveness of a particular application of pricing incentives, in conjunction with a mass-marketing campaign, to foster adoption of electronic toll collection in Illinois.
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