South-Western College Publishing - Economics



Toll-road price increases are forcing people to ride together


Tolls on America’s toll roads are increasing this year.


Economics and the Environment; Government and the Economy 

Key Words

toll, increase, costs, subsidy.

News Story

             The amount of money people must pay to use particular roads in the US is increasing this year.  On over a third of American toll roads, rates are increasing anywhere from 5% to 100%. 

            It now costs $3, a 50% increase over the previous toll, to cross the San Francisco Bay Bridge; the New York State Thruway will cost $18.50, up from $14.70 last year, to drive the full 641 miles.  The Illinois Tollway is increasing tolls by 56%. 

In conjunction with the toll increases, transportation authorities are trying to make it easier on commuters by incorporating electronic payments using a transponder on the dashboard of a car.  When the transponder indicates toll road use, the toll is automatically deducted from the user’s prepaid account on his/her credit card.

            Transportation departments are increasing funds for a number of reasons--most notably additional road repair needed because of the steady increase in commuter traffic over time.  Other increases simply reflect an inflation-adjustment:  Pennsylvania’s toll increases were the first since 1991, for example. 

            Money coming from the toll increases pays for additional services, a mechanism known as cross-subsidization.  Cross-subsidy arrangements are common in public policy; for example, the tax on cigarettes is (ideally) used to pay for health care-related issues.  Funds from toll roads are earmarked for other uses as well.  Tolls on the Dulles Toll Road in Virginia are set to double to $3, with the proceeds going to finance a commuter rail line in the area.  Further, those who choose not to use tolls may avoid the cost, but these individuals incur other costs, including additional time spent commuting.  Avoiding toll roads typically implies a longer, less-direct route to a destination.



Officials began turning to toll roads as a way of eliminating the external cost imposed on other drivers.  What is this external cost, and why does imposing a toll eliminate the externality?


What can be said about elasticity of commuting time for those who choose to use the toll roads?  Why?


Does use of the electronic payments with the transponder reduce costs at all?  Why or why not?  Use economic arguments in your answer.


Daniel Machalaba.  “Steep Increases for Toll Roads.”  The Wall Street Journal.  D1.  12 April 2005. 

Return to the Economics and the Environment | Government and the Economy Index

©1998-2005  South-Western.  All Rights Reserved   webmaster  |  DISCLAIMER