By ET

There is an interesting story in New York Times yesterday: The mayor of New York City announced that a “Congestion Price” will be charged during peak hours on the most congested roads in NY.

From NYT: The basic idea behind congestion pricing is simple: make motorists pay to use the busiest streets. Under the Mayor�s proposal, an invisible line would be drawn around Manhattan from Eighty-sixth Street south to the Battery. Vehicles crossing this line on weekdays between 6 A.M. and 6 P.M. would be charged a fee�eight dollars for cars, twenty-one dollars for trucks. (Those travelling only within the congestion zone would pay half price, while taxis and livery cabs would be exempt.) The fees would be assessed electronically and could be paid either with a toll pass or over the phone or the Internet.

This seems a natural response to the problem of congestion: if you really need to use that street, that means you have something important to do, and potentially would rather pay more than other people to get a less congested street. However, look at many other congested places: Disney Land, Ski resorts, amusement parks, Movie theaters on the first day of blogbuster movie release. It seems that fixed price is a pretty standard practice. Why these places do not increase the price in peak season?

I went to watch Spider-Man 3 this Monday, in the whole cinema there were only a few people. So it felt like I had the movie in my living room, giving me the full freedom and preventing me from exposure to the germs in public areas… Should they increase the price or decrease the price on Monday? On one hand, I had a much better movie-going experience than people who went just one day before. I’d rather pay twice the price to enjoy this experience. Yet they did not over charge me. On the other hand, they can lower the price to attract more people to go on Mondays. Yet they did not lower the price. Maybe, these two effects can cancel out! That is: they do not need to lower the price to attract people, because people expected a better experience, and the people I saw on Monday already took this into consideration.

By ET This entry was posted on Wednesday, May 9th, 2007 at 1:23 pm and is filed under General, Random Thoughts, Research, Teaching, Technology. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.