Auctioning Green Time

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

Eddie, a traveler in a hurry arrives at a traffic light from the East. He would pay up to $18 to save an hour. Sue, a less-hurried casual traveler arrives from the South, she would only pay $6 to save an hour of travel right now. Who gets the green light, who gets the red? Presently this is decided without consideration of how much Eddie or Sue would be willing to pay to save a few seconds or a few minutes. No one has the ability or the authority to make a transaction occur where Eddie can pay a few cents to Sue and get the green light while Sue waits for the light to change. Until recently, this was because it was technologically infeasible, but in recent years, advances in transportation signal technology and real-time wireless vehicle-infrastructure communications have made this once impossible transaction possible. Now it is institutional constraints that prevent this from happening. Traffic signals are in almost all towns, cities, counties, and states publicly owned and managed. Imagine instead that this was a service that private firms would bid to supply.

A new organization, LightSpeed Traffic, has paid your city $100,000 a year for the privilege of managing traffic signals. Instead of this being a cost center for the city, it is now a revenue generator. Why do they do this? A private operator is able to use traffic signals more efficiently from an economic perspective than a public agency, they can obtain revenues from sources such as:

  • Acting as the facilitator of transactions between travelers as described above to minimize weighted travel delay, Eddie pays $18/hour (30 cents a minute) and saves a minute, Sue is compensated at $6/hour (10 cents a minute), and LightSpeed Traffic keeps the difference, 20 cents a minute, to cover the costs of operating traffic signals, paying the city for the franchise, and earning some profit for shareholders. This could scale up, by summing all of the traffic from each approach, and multiplying by their respective values of time. (See for instance Varirani and Ossowski (2012), or Dresner and Stone (2008) for illustrations.)
  • Providing real-time traffic data to a new generation of GPS companies that aim to provide routing information to travelers. By investing in the signals and sensing technologies around the intersection (and at nearby intersections they also manage), LightSpeed has accurate estimates of arterial travel time, and can make predictions about future travel times, data that is extremely valuable to those providing real-time advanced traveler information.
  • Administering red-light running cameras.
  • Advertising at the traffic signal when it is red (as suggested by the linked patent). Like transit companies who sell advertising on the interior and exterior of buses and bus stops, traffic signals have laid out before them a captive audience that might be interested in real-time information, especially information that was customized by place and traveler. LightSpeed has the authority to coordinate advertising with traffic signal timings. Not making the light extra long to force drivers to wait, but simply to use variable message signs to display ads when the light is red anyway, and to benefit travelers by displaying real-time travel information when the light is green.

Presently a few companies operate traffic signals under contract to municipalities, notably in Sandy Springs, Georgia. None yet use signals innovatively as described above.

Obviously this can get quite complex: there may be more than one approaching driver, how do you decide the baseline to estimate vehicle time-saved or time-list by adjusting signal timings, how does this work in networks instead of just isolated intersections.

But scarce resources (like two vehicles seeking to use the same space at the same time) can be allocated in many ways other than arbitrarily or first-come first-serve, to the benefit of all. Sometimes the best solution is a yield sign, sometimes a stop sign, sometimes a roundabout, sometimes a traffic signal, sometimes a grade separation. To be clear, it is not always a traffic signal. When it is a traffic signal, there might be some merits to thinking creatively about the organization and operation of the market that is created by the rationing of time for the benefit of all.

A success we should build on

The London Green Belt has been in place since just before World War II when Patrick Abercrombie’s study recommended establishing a ring around the city which would remain unsuburbanized (one hesitates to say undeveloped, as farms are there). Now with the housing shortage, people are again suggesting the Green Belt is “a success we should build on”:

Build on the green belt, and build now-Comment-Columnists-Minette Marrin-TimesOnline
Back in the day, the solution was to build new towns outside the Green Belt. Gordon Brown is proposing more of these. Towns like Welwyn and Letchworth were built as Garden Cities by Ebenezer Howard, and, but, by design are relatively small (on the order of 33,000 residents for Letchworth, 55,000 for Welwyn Garden City). From my visits, they seem excellent places to live, though the scale may be slightly off outside the town center (the residential density is a bit low, creating excessive walking distances).
Stevenge, (population 80,000) a post-war new town, (built on a much older town) is very much like Columbia, with large elements of Radburn, many pedestrian tunnels to access the town center and train station. There are also traffic roundabouts everywhere, so cars need not stop at signals. I felt like I grew up here.
Milton Keynes (population 185,000) on the other hand is much larger, but terribly overscaled, with large gaps between the residential and downtown areas. This creates opportunites for infill, but in the meantime there is an excessive amount of surface parking in the town center. Unlike the other towns I named above, the shopping mall (the largest single level mall in the world?) is disconnected from the train station.
Despite its imperfections, this model of new towns has a number of advantages over just adding another suburb in the Green Belt. They provide (or at least can provide) a coherent center and place. By increasing “surface area” they reduce the distance between people and the countryside. Every development in the Green Belt makes existing Londers that much farther from the country.
Now, one might suggest if the Green Belt is to be preserved, it should be done the right way, by buying the land (or development rights), rather than by fiat or regulations. This certainly seems a better way of controlling the use of land if property rights are to be respected. But the point here isn’t about the mechanics of how land should be preserved, but about what constitutes a better urban form
A) A giant unbroken conurbation where rings of development are fully contiguous
B) A large conurbation with satellite cities.
The latter, while it might increase average distance to the center, decreases distance to the edge. It also provides more variety and differentiation of the bundle of attributes that we call property.
Perhaps the market should decide, but the market fails in providing numerous public goods (access to the countryside being an example), as some things are very difficult to establish easily enforceable rights for.