The Economic/Behavioral Effects of Bridge Tolls

Those of you who live in Louisville are likely very aware of the upcoming tolls on a few of our local bridges. Given the high amount of use that these bridges face in the Kentuckiana area, it will be interesting to see how traffic behavior changes with the introduction of these tolls. What exactly might be some of the changes instigated by these new tolls?

In essence these tolls will behave as a tax on the use of three of the five Ohio River bridges, raising the cost of travel via these bridges. (As a sidenote, a toll seems to be a more equitable way to pay for the costs of the bridge than increasing everybody’s state/local taxes, regardless of their use of the bridge.) All else equal, economists generally believe that an increase in price leads to a decrease in quantity demanded. Thus, it would make sense that traffic on these tolled bridges would decrease, as people try to effectively plan and limit their trips across the river.

Now the exact size of this decrease is a little bit harder to predict. One factor that effects the size of a decrease in quantity demanded, relative to an increase in price is the availability of close substitutes. The bridges not being tolled would seem like legitimate substitutes, meaning it would seem reasonable to expect traffic on non-tolled bridges to increase.

However, it will be interesting to see whether drivers traveling from (for example) downtown Louisville to Clarksville or Charlestown view the Sherman Minton Bridge as a legitimate substitute or if cost of the extra travel time would outweigh the benefit of avoiding the toll. If time is money, as the saying goes, than it seems reasonable to expect some people (especially high earners) to choose to pay the tolls and save time. People making less money, whose time is presumably less valuable (from a strict wage perspective) would likely be willing to endure longer travels for the sake of saving some money.

All that said, this is merely theory and there are most likely other factors that will effect commuting behavior beyond what I highlighted here. Hopefully, this post was helpful and thought provoking. It will be interesting to see how this change effects the city of Louisville and the surrounding area.

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If you agree or disagree with the thoughts posted here or have additional thoughts on this issue, please feel free to post a comment or send me an email. I’d love to hear what you have to say. Thanks for reading!

 

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