Bill Vickrey was a friend of my Georgist grandparents, and very kindly brought
my grandfather to my home after one of the TRED meetings in Cambridge.
a wonderful conversational partner, and we covered many topics. I'm
inspirations for this website is his frequently-heard and oft-quoted
comment on academic papers he heard presented:
"This paper would benefit
from an application of Henry George's idea of taxing land values."
So if you see the exclamation Vickrey! applied to
on this website, you'll know what it means.
Bill would be been very pleased with the opportunities for pricing highway
services that EZPass technology offers.
See Warm Memories of
Bill Vickrey for more about this extraordinary man.
Nic Tideman: Applications of Land
Value Taxation to Problems of Environmental Protection, Congestion, Efficient
Population, and Economic Growth
The logic of efficient environmental protection applies with few changes to
issues of congestion. Parking meters are simple example of the application
of land value taxation to solving a problem of congestion. If there is a shortage
of parking places (at a zero price) then the introduction of parking meters
(charging rent for the use of land) can relieve the shortage. Ideally, the
price of a parking meter should vary by time of day to reflect variations in
the demand for parking places. The ideal fee would equate supply and demand
at each time of day, with lanes of streets devoted to parking only where the
revenue generated by the parking fees exceeds the value of the additional lane
in speeding traffic. Perhaps in a few years we will have parking meters with
prices that vary by time of day. We certainly have the technology. In the meantime,
we get by with meters that charge a single price throughout the part of the
when demand is greatest.
Charging rent for parking is only a small step from charging rent for cars
that are moving on city streets. The more cars there are on the streets, the
slower everyone goes. The marginal cost of having one more car on the streets
is the value of the extra travel time that everyone else endures because of
the one additional car. In many places, the congestion cost of traffic is less
than the cost of administering a system of congestion fees. But this is not
the case everywhere. William Vickrey used
to say that his estimate of the cost in additional delays of having one more
car in midtown Manhattan in the middle of the day was about $20,000 per hour.
He would go on to say that this did not imply that people should be charged
$20,000 per hour for using the streets of midtown Manhattan. He had estimated
marginal cost at the present level of usage. The efficient charge -- perhaps
$25 per hour -- would reduce use of the streets so greatly that the marginal
congestion cost of street usage would equal the price. Efficient congestion
prices for using the streets of Manhattan (or Boston or other large cities)
would not merely charge for ordinary usage but would also entail special charges
for anyone who double-parked or parked in some other illegal way that created
congestion. If we could keep track of the movements of vehicles, then for any
vehicle that stood still ahead of backed-up vehicles that wanted to move, there
would be a charge for the resulting congestion cost, which would be quite high.
Companies making deliveries to downtown areas might decide that it was far
better to make deliveries at night than to tie up the streets in the day.
Congestion charges also apply to bottlenecks such as bridges and tunnels. Whenever
such a facility has cars backed up seeking to use it, efficiency is improved
by applying a toll that reduces demand to capacity. The same output is produced,
revenue is generated, and the waste of queuing is avoided.
The efficiency of congestion pricing would also apply to such public facilities
as airports and parks. When airlines want to have more take-offs and
landings than an airport can accommodate, it is efficient and just to allocate
take-off and landing slots by price. Unfortunately, Congress, at the behest
of airlines, has prohibited airports from doing this, requiring them instead
to allocate take-off and landing slots by non-price means. ... read the whole article
An Open Letter to Mikhail Gorbachev (1990),
signed by Bill Vickrey and 29 others