Markets for road use: eliminating congestion through scheduling, routing, and real-time road pricing

Date & time

12–1.20pm 15 February 2018


Weston Theatre, Level 1, JG Crawford Building 132, Lennox Crossing, ANU


Prof Peter Cramton, Univeristy of Cologne and University of Maryland


 Paul Burke

Traffic congestion is a global problem with annual costs approaching $1 trillion, and is a major challenge in Australian cities. The health and environmental costs are often severe. With the right policies, those costs can be greatly reduced. The Australian government has launched a review into road pricing mechanisms.

In this talk, Professor Peter Cramton will explain how advances in mobile communications and computer technology now make it possible to efficiently schedule, route, and price the use of roads. Efficient real-time pricing of road use can eliminate traffic congestion, enhance safety, improve the environment, and increase vehicle throughput. Such pricing schemes can also raise reliable, much-needed revenue to modernise decaying infrastructure while improving long-term investment in transport. Professor Peter Cramton will describe the design of a market for road use that is based on efficient scheduling, routing, and pricing. Under the design, road use is priced dynamically by marginal demand during constrained times and locations. In unconstrained times and locations, a nominal fee is paid for road use to recover costs, as is the case for other utilities. Transport is scheduled based on forward prices and then routed in real time based on real-time road-use prices.

Peter Cramton is Professor of Economics at the University of Cologne and the University of Maryland. Since 1983, he has conducted widely-cited research on auction theory and practice. His work has involved developing innovative auctions in new applications, such as auctions for airport slots, wind rights, diamonds, medical equipment, and Internet top-level domains. He has advised on the design of carbon auctions in Europe, Australia, and the United Sates, including for the world’s first greenhouse-gas auction held in the UK in 2002. He has also advised numerous governments on market design and dozens of bidders in major auction markets. He received a BS in Engineering from Cornell University and a PhD in Business from Stanford University. Professor Cramton is an independent director on the board of the Electric Reliability Council of Texas and an advisor and chief economist to several companies.

This seminar is convened by the Centre for Climate Economics and Policy, the Australia-Germany Energy Transition Hub, and the ACT Branch of the Australasian Agricultural and Resource Economics Society.

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