In this case $30 is the price they've determined they will make the most money. Charge more and too many customers will drop out to justify the increase. Charge less and you're leaving money on the table.
But is that supposed to be the goal of surge-pricing on a public, state-built road? Or is it supposed to be about easing congestion?
If the aim of the government was to always find the price at which they could make the most money possible, we'd live in a very different place.
https://www.expresslanes.com/project-background
> In 2007, VDOT finalized a long-term partnership agreement with Capital Beltway Express, LLC – a consortium led by Transurban that would design, build, operate, finance and maintain the $2 billion HOT lanes project. Transurban and its partners provided a substantial upfront equity commitment to help fund construction and financed the rest of the project through private activity bonds and a TIFIA loan. The partnership enabled Virginia to leverage private capital to translate every one state tax dollar into four dollars of transportation improvements.
>Construction, managed by Fluor-Lane, began in 2008 and the new lanes opened for business in 2012.
>In 2014, Transurban invested an additional $280 million of equity to put the project on solid financial footing following impacts of the global financial crisis. The private sector has assumed the long-term financial risk for the project, including full responsibility to pay back all project debt.
It's a ridiculous notion -- the government has the ability to raise capital far more cheaply than private capital markets, and revenue from toll-roads is one of the most reliable revenue streams that exist. It's not zero-risk, but pretty close.
It's just a scheme to move debt to somebody else's books, and make more money for various parties. It also provides fertile ground to re-direct anger from government operational incompetence or underinvestment, like plowing in such a way that you create miles of gridlock instead of doing things like pre-treating the road surface to avoid plowing during peak travel times.
I don't think privatized prisons charging $14/minute for phone calls is a good thing either, even if the "market" (prisoners needing to call their lawyers, and having no other options, etc.) allows it.
Exactly! And I cringe every time I hear people talk about how "if government was run more like a business" and how government would/should then make profits and ...
BS alternate side parking tickets in the "winter" when there isn't any snow nor any forecast for snow is bad enough where I live. It's just a BS alternative revenue source and crap like it would only happen more and become more asinine. "Just following orders and doing my job..."
The purpose of the express lane is that you don't want congestion. So you keep raising the price until enough people bug out that it's not congested while still maximizing the number of cars going through and paying you the toll.
Call me cynical, but if there was no congestion, who would pay to use the express lanes? Sounds like a good excuse to do some "traffic "studies""...
You'd have to prove that to me for this particular instance. Here, you are post hoc rationalizing it and it's much like a circular argument.
Keep raising the price until enough people are no longer willing to pay that the road isn't congested.