Deadweight loss in highway toll collection

This paper examines the deadweight loss from collecting tolls on congested highways. Although this problem has been recognized in the literature, no attempt has been made to systematically examine the problem. Four economic models for commuter behavior associated with waiting at a toll booth were developed and analyzed. These models include (1) no tolls and no waiting, (2) tolls with no waiting, (3) waiting with no tolls, and (4) waiting with tolls. The results indicate that under quite reasonable circumstances, it may be optimal to not collect tolls if their collection requires that free-flowing traffic be stopped. In cases where traffic forms a queue because of a bottleneck, tools may provide small welfare gains, but if toll collection creates waste in the form of administrative costs or rent-seeking behavior, the optimal solution may again be to not charge tolls.