Chip Taylor

Hybrids and carpools, prices and tradeoffs

Over at the Volokh Conspiracy, Todd Zywicki has a couple of posts discussing an article in the Washington Post. The article reports that an exemption allowing hybrid vehicle drivers to go solo in the car pool lanes appears to be worsening congestion problems.

First, Todd discusses some of the tradeoffs involved in the exception for hybrids. Then he notes the similarity between issues of "fairness" involved in paying tolls to drive in a special lane and paying money for a special car to drive in a special lane. "Lexus lanes" indeed.

I think the article illustrates another argument in favor of tolls: you can adjust tolls to balance tradeoffs between different objectives.

The use of carpool lanes address two different, but related, problems: traffic congestion and vehicle emissions. To the extent they encourage carpooling, the HOV lanes address both problems together. When you reduce the number of cars on the road, you reduce both congestion and emissions. You may not get the optimal reduction in either problem but you reduce them together; there are no tradeoffs.

When you introduce the exception for hybrids you introduce tradeoffs between congestion reduction and emission reduction. You are, in effect, allowing people to contribute to congestion (relative to carpooling) in return for reducing emissions by driving a hybrid car.

The situation described in the article indicates that officials mispriced the tradeoff. But, under the existing system, they can't really help it. They are trading in behavior, rather than dollars and cents, so the pricing instruments are crude. You either drive a hybrid or you don't. You are either in the HOV lane or you aren't.

Tolls would allow for more precise pricing and more finely tuned tradeoffs. You could reward hybrid drivers for emission reduction by charging a lower toll. Then you could monitor emissions and congestion to judge the propriety of the relative prices.

UPDATE: More on the same issue at RPPI's Out of Control.