Friday, August 1, 2008

Variable Speed Road Tolls, Part II

If proven successful, the pricing mechanism I describe here could even be used to replace speed limits altogether. Assuming that in the future every vehicle will be tracked by GPS (it's going to happen, get over it), greedy government officials may want to charge drivers with a fine every time they exceed the speed limit. This just isn't practical. People will either be so paranoid of getting a ticket that they'll drive horribly because all they're thinking about is their speed, or so many people will get tickets that there'll be a massive backlash against the system in general.

I think a much more palatable and more effective way to enforce desired speeds would be by charging different rates for different speeds. Imagine a pricing scheme like the example below:

People respond to financial incentives, and this system seems like a much more transparent system than fines (and insurance premiums!) to cajole people into driving the optimal speed. Plus, this would allow police to focus on the truly dangerous act of driving recklessly (which could still include driving faster than conditions allow) instead of having to arbitrarily decide which driver going 10 mph over the speed limit they're going to pull over.

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