Dynamic Pricing and Congestion Pricing: The Case of the MnPASS Program

Principal Investigator(s):

Chunying Xie, Former Researcher, Economics

Project summary:

This research is focusing on the MnPASS program's dynamic pricing mechanism. Minnesota has been a pioneer in introducing dynamic pricing into its highway network, beginning with the introduction of the MnPASS program on Interstate 394 in 2005. Motorists who wish to use the special-access MnPASS lanes are charged a variable price that changes every three minutes based on traffic conditions. If traffic is light, access to MnPASS lanes may cost only $1.25; during heavily congested rush hours, the price could rise to $8. This variable pricing mechanism serves an important economic allocation function, ensuring that the price is not so high that it discourages use of the MnPASS lanes, resulting in under-utilization, or not so low that it encourages too many vehicles to use the lanes, resulting in congestion that slows buses and carpools. This research will model how individuals respond "on the fly" to variable prices for MnPASS lanes using a newly available dataset from the Minnesota Regional Transportation Management Center. The dataset includes data in 30-second intervals on traffic volume, congestion, and speed for every lane, entrance, and exit on Interstate 394, as well as corresponding data on the MnPASS lane prices that drivers would have seen at every instant. The model will allow the PI to evaluate the traffic-efficiency gains of the program for drivers in the MnPASS lanes and regular lanes and provide recommendations for modifying the pricing formula MnPASS uses to make the program more efficient.

Project details:

  • Project number: 2013022
  • Start date: 07/2012
  • Project status: Completed
  • Research area: Planning and Economy