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The Value of Urgency: Evidence from Real-Time Congestion Pricing

Author

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  • Antonio Bento
  • Kevin Roth
  • Andrew R. Waxman

Abstract

Taking advantage of repeated appearances of drivers in Los Angeles’s ExpressLanes under varied traffic conditions, we uncover the distribution of individuals’ preferences for time savings in a novel application of a hedonic pricing model. In this setting, we introduce the concept of the value of urgency, defined by a component of willingness to pay to enter tolled lanes to avoid a congested alternative route. The value of urgency does not scale in the amount of time saved, reflecting discrete penalties for late arrival. We show that this value accounts for 87% of total willingness to pay to use the ExpressLanes, while the contributions to WTP from other widely used valuation measures, such as the values of time and reliability, are negligible. We suggest that quality-of-service pricing that varies in real time and removes uncertainty over travel times creates new markets for individuals to avoid lateness and reveal their preferences for urgency.

Suggested Citation

  • Antonio Bento & Kevin Roth & Andrew R. Waxman, 2020. "The Value of Urgency: Evidence from Real-Time Congestion Pricing," NBER Working Papers 26956, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26956
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    Cited by:

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    2. Tingqiu Cao & Xianhang Qian & Le Zhang, 2024. "The price of the slow lane: Traffic congestion and stock block trading premium," International Review of Finance, International Review of Finance Ltd., vol. 24(1), pages 30-52, March.
    3. Kastl, Jakub & Buchholz, Nicholas & Doval, Laura & Matějka, Filip & Salz, Tobias, 2020. "The Value of Time: Evidence From Auctioned Cab Rides," CEPR Discussion Papers 14666, C.E.P.R. Discussion Papers.
    4. Bencsik, Panka & Lusher, Lester & Taylor, Rebecca L.C., 2023. "Slow Traffic, Fast Food: The Effects of Time Lost on Food Store Choice," IZA Discussion Papers 16036, Institute of Labor Economics (IZA).
    5. Ariel Goldszmidt & John A. List & Robert D. Metcalfe & Ian Muir & V. Kerry Smith & Jenny Wang, 2020. "The Value of Time in the United States: Estimates from Nationwide Natural Field Experiments," NBER Working Papers 28208, National Bureau of Economic Research, Inc.
    6. Beaudoin, Justin & Lin Lawell, C.-Y. Cynthia, 2018. "The effects of public transit supply on the demand for automobile travel," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 447-467.
    7. Durrmeyer, Isis & Martinez, Nicolas, 2022. "The Welfare Consequences of Urban Traffic Regulations," TSE Working Papers 22-1378, Toulouse School of Economics (TSE).
    8. Bencsik, Panka & Lusher, Lester & Taylor, Rebecca, 2021. "Slow Traffic, Fast Food," 2021 Annual Meeting, August 1-3, Austin, Texas 313856, Agricultural and Applied Economics Association.
    9. Beland, Louis-Philippe & Brent, Daniel A., 2018. "Traffic and crime," Journal of Public Economics, Elsevier, vol. 160(C), pages 96-116.
    10. Beaudoin, Justin & Chen, Yuan & Heres, David R. & Kheiravar, Khaled H. & Lade, Gabriel E. & Yi, Fujin & Zhang, Wei & Lin Lawell, C.-Y. Cynthia, 2018. "Environmental Policies in the Transportation Sector: Taxes, Subsidies, Mandates, Restrictions, and Investment," ISU General Staff Papers 201808150700001050, Iowa State University, Department of Economics.
    11. Wichman, Casey J. & Cunningham, Brandon, 2023. "Notching for free: Do cyclists reveal the opportunity cost of time?," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    12. Buchholz, Nicholas & Doval, Laura & Kastl, Jakub & Matejka, Filip & Salz, Tobias, 2020. "The Value of Time: Evidence From Auctioned Cab Rides," CEPR Discussion Papers 14666, C.E.P.R. Discussion Papers.
    13. Zheng Li, 2020. "Experimental Evidence on Socioeconomic Differences in Risk‐Taking and Risk Premiums," The Economic Record, The Economic Society of Australia, vol. 96(313), pages 140-152, June.
    14. Gabriel Kreindler, 2024. "Peak‐Hour Road Congestion Pricing: Experimental Evidence and Equilibrium Implications," Econometrica, Econometric Society, vol. 92(4), pages 1233-1268, July.
    15. Shoup, Donald, 2021. "Pricing curb parking," Transportation Research Part A: Policy and Practice, Elsevier, vol. 154(C), pages 399-412.

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    More about this item

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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