(Albufeira, Portugal) Congestion Pricing at Work?

Yesterday afternoon, a trio of fellow Conference on Postal and Delivery Economics attendees and I were marveling at the emptiness of the A2 motorway connecting the southern exburbs of Lisbon and the Algarve region. Certainly, there is not a whole lot of stuff en route, but you could say the same thing about a lot of points 250 km apart along the Interstate highway system west of the Mississippi River; those are not that lightly-traveled.

There are income and substitution effects to consider: Portugal’s per-capita GDP is 75% of the EU average (or less than 2/3ds that of Rich Europe), and fuel was dear at around €1.50/liter — though the preponderance of small diesel-powered cars implies a much smaller difference in per-km costs versus the U.S. than you’d get from the pump price. But one of the bigger hits was the toll of almost €19. A 150-km ride on the Pennsylvania Turnpike a couple weeks ago for another conference was $4; the Illinois Northwest Tollway, highly congested in the Chicago suburbs and exurbs, only hits you up for $2 between the Wisconsin state line and the toll-free city Chicago expressways if you use the system enough to shell out for an I-Pass transponder (they price-discriminate by charging twice the I-Pass toll for cash, which for all I know may be going on here, too).

This makes me think that the main concern for the privatization of tollways is less the outsourcing of toll-raising dirty work to the private sector so much as whether the states are adequately compensated for such right to raise the tolls as they sell. (*)

* To possibly forestall certain lines of comments, I don’t actually support government eating-of-capital as a politically expedient alternative to raising other taxes.