The Downside of E-Z Pass

The upside of E-Z Pass systems is that they enable the real-time pricing of road use, allowing those who construct and provide the roads to set prices that reflect current road congestion. As congestion increases, road prices can be increased so that those drivers who don’t need to use the roads as urgently as others can be persuaded through higher prices to exit the road, thereby reducing traffic. Bob Poole has written about this in many places, but see here for one example. The downside of E-Z Pass systems, however, is that, without competition in the provision of road transportation, they can be mechanisms by which government somewhat surreptitiously raises taxes in the form of tolls without drivers really internalizing the costs.