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HOT or Not: Driver Elasticity to Price on the MnPASS HOT Lanes

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  • Michael Janson
  • David Levinson

    (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)

Abstract

The Minnesota Department of Transportation (MnDOT) has added MnPASS High Occupancy Toll (HOT) lanes on two freeway corridors. While not the first HOT lanes in the country, the MnPASS lanes are the first implementation of road pricing in Minnesota and possess a dynamic pricing schedule. Tolls charged to single occupancy vehicles (SOVs) are adjusted every three minutes according to HOT lane vehicle density. Given the infancy of systems like MnPASS, questions remain about drivers’ responses to toll prices. Three field experiments were conducted on the corridors during which prices were changed. Data from the field experiments as well as two years of toll and traffic data were analyzed to measure driver responses to pricing changes. Driver elasticity to price was positive with magnitudes less than 1.0. This positive relationship between price and demand is in contrast with the previously held belief that raising the price would discourage demand. We hypothesize this is because drivers use price as a signal of time savings. In addition, drivers consistently paid between approximately $60-120 per hour of travel time savings, much higher than the average value of time. Reasoning for these results is discussed as well as the implications these results have on the pricing of HOT lanes.

Suggested Citation

  • Michael Janson & David Levinson, 2013. "HOT or Not: Driver Elasticity to Price on the MnPASS HOT Lanes," Working Papers 000111, University of Minnesota: Nexus Research Group.
    • Handle: RePEc:nex:wpaper:hotornot
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    File URL: http://hdl.handle.net/11299/180049
    File Function: Second version, 2015
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    References listed on IDEAS

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    Cited by:

    1. Janson, Michael & Levinson, David, 2014. "HOT or not," Research in Transportation Economics, Elsevier, vol. 44(C), pages 21-32.

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    More about this item

    Keywords

    transport economics; HOT Lanes; road pricing;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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