Price Discrimination at Toll Booths

February 4, 2009

What if toll booths charged different amounts in different booth lanes? The San Francisco Bay Bridge always charges $4, but could charge a range of prices between $2 and, say, $20 at the same time, depending on which lane you were in and how much traffic there was. (I don’t mean lanes on the bridge, I mean lanes to pay the toll.) The cheap lanes would naturally be longer, but you could pay to get a shorter line. The amounts would be structured so that the bridge makes as much money as they do now.

This feels wrong to me. It feels like poor people would, once again, suffer through much longer lines (since there would be fewer lanes in their price range) while rich people whiz by. Poor people don’t necessarily have any more free time than rich people.

But this kind of discrimination is already all around us. Poor people take the bus while the rich drive. They’re in waiting lists at Kaiser while the rich get appointments the next day with their PPO. In fact a poor person may be very happy to wait an extra 20 minutes to save two dollars on the booth every day, who knows? They certainly don’t have that option now, and they would still be free to pay $4 for a medium-length lane.

So why does this kind of radical free market approach make me uncomfortable with a toll booth? Is it because it would be an explicit policy, rather than hidden and evolved as with buses or doctor waiting lines? Or because it’s done by the government? Or because it’s so clear that people are being segregated by wealth?

(I’m ignoring the practical difficulties of explaining such a system, especially one that’s dynamically changing based on traffic conditions.)

Price discrimination is the practice of charging two customers different prices for the same product. Classic examples are flights, which cost business travelers more because they’re not staying over a Saturday night. Would varying prices across booth lanes qualify as price discrimination? It’s not really the same product if the waiting times are different.

Still, I can’t think of another example of the exact same product being sold at two different prices with the sole difference being the waiting time, and that waiting time naturally resulting from the price difference (i.e., not imposed by the provider). I feel genuinely stuck trying to decide if this would be morally okay.

Update 2/21/2009: Next year they’re going to allow solo drivers to pay to use the carpool lane in some parts of the Bay Area. That’s similar in most ways to my suggestion above.