Reason Foundation

Reason Foundation

Standardizing Electronic Toll Collection

James V. Halloran III
September 1, 1992

Executive Summary

As California develops toll roads during the 1990s and considers the use of congestion pricing to resolve freeway congestion, electronic toll collection technology will assume increasing importance. These electronic, computer-based systems permit nonstop collection of charges for highway use, without requiring costly toll booths. They also facilitate charging different prices at different times of day and for different segments of a highway—qualities necessary for congestion pricing.

It would be desirable for drivers to be able to use a single electronic “tag” statewide, rather than having to obtain separate tags for each tolled facility. A 1990 state law required the California Department of Transportation to develop a statewide technical specification for electronic toll collection systems. This statewide specification was issued in July 1992.

This paper reviews the technical and policy (economic, legal, and social) implications of electronic toll collection systems. It finds that the technology is developing rapidly, with new approaches being developed by both U.S. and European firms. Firstgeneration systems which are in use today possess few of the features promised by second-generation systems now in the prototype stage.

The Caltrans specification is unnecessarily restrictive, demanding some features which first-generation systems cannot provide but precluding other promising technological approaches. It therefore risks holding back both the first several toll road projects and the expected evolution of this new technology. The preferable approach would be to set only interim, regional, performance-based specifications that would encourage ongoing improvements in the technology. Over the longer term, the marketplace is the preferable means of determining standards, as has occurred in both the consumer electronics and personal computer industries.

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