Road Pricing: A Solution to Gridlock

Andrew Salzberg
Mar 30, 2017 · 3 min read

For decades, policymakers around the world have struggled to find a lasting solution to the unwieldy problem of congestion. At its core, congestion is travel delay caused by an imbalance in transportation demand and supply. When there’s more demand for road space than supply, each individual vehicle added to a roadway delays all other users of the road.

And while we all suffer from being trapped in gridlock, no individual driver pays a direct cost for their impact on congestion. In economics that’s called an “unpriced externality” and the result is that drivers tend to hog — or “overconsume” — road space.

Traditionally, cities and states have tried to build their way out of congestion by adding more lanes of road. Over time, this has been shown to be self-defeating — the more road space is added, the more cars fill the available space. This phenomenon is so predictable that it’s come to be known as the ‘fundamental law of road congestion,’ and it’s the reason why so many attempts to reduce traffic delays by adding additional highway lanes have been unsuccessful.

To tackle this issue at its core, the cost of driving ultimately needs to reflect its cost to our cities. It’s becoming increasingly clear that the most effective way to manage vehicles on the road is through pricing. By charging a fee for all vehicles (private motorists, delivery vehicles, taxis, and services like Uber), road pricing creates an incentive for everyone to share space more efficiently.

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We’re ready to support this type of broad-based road pricing because a marketplace for efficiency is an exciting prospect for ridesharing companies. At Uber, our goal is to turn every journey into a shared journey, getting more people into fewer cars. Since 2014, we’ve been building and expanding our uberPOOL product to do just that. It dynamically matches multiple passengers, making sharing a ride more convenient than it’s ever been. And just last week we announced that we’re piloting our casual carpooling product that works just like a digital slug line.

When all car users pay a price for their travel, we believe even more people will be incentivized to share. Indeed, we’re already seeing this in Singapore where every car pays a fee (called the Electronic Road Price or ERP) to drive at congested times and locations. With uberPOOL, riders split that fee when they share a ride, providing an additional incentive to share space more effectively.

In the end, effectively managing congestion will take many people working together, and we’re only one part of the solution. The most efficient way to move large numbers of people in dense cities will always be mass transit. That’s why we’re excited to be working with public transport providers across the world. We’re also helping share data that can help cities diagnose the times and locations where congestion is occurring. We believe that a better understanding of our congestion challenges can help generate more targeted solutions.

We’re excited to work with cities around the world to get more people in fewer cars, keep cities moving, and help build the future of urban mobility.

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