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"CarTrek" Integrating Technology with Pricing Schemes Harold Worrall, OrlandoOrange County Expressway Authority Kuniaki Nakamura and Nihon Doro Kodan, Japan Highway Public Corporation TECHNOLOGY AND PRICING: outcome of the new questioning process is the construc- CAUSE OR EFFECT? tion of transportation facilities through concession arrangements, much like those that have taken hold in Harold Worrall many parts of the world since World War II. Who should pay for technological advances: government, the automo- Are technology and pricing the cause or the effect? The bile industry, the insurance industry, or the consumer? answer is yes! An example of policy affecting technolog- Must technology have value for it to become ubiquitous ical development is the challenge that President John F. in a free market environment? Information is itself valu- Kennedy made to America to "put a man on the moon able, and those who own the information may generate and safely return him to earth before the end of the revenue for either the public or the private sector. What decade." In that instance policy served as a catalyst to a about liability? To what extent should government broad range of technologies, including transistors and absorb liability through sovereign immunity? integrated circuits. In contrast, the technology of radio Social equity is also a consideration in the application frequency identification and its practical translation into of technology. Critical to the success of new applications electronic toll collection (ETC) strategies have served as is the protection of private information in a free democ- a catalyst for road pricing in all its forms. As facets of ratic society. The perceived threat of "big brother" is a policy and technology interact, new variants of policy chilling factor to many and can cause the rejection of and technology are created. The process is iterative. otherwise reasonable public policy. Should technology A policy pyramid was presented that graphically be available to all or just those who are able to pay for identified the relationship of policy, funding, demand, it? Rawls's theory of justice would say that the protec- and supply. Each face of the policy pyramid is interac- tion of the minimum position could be violated by pric- tive with the others, and the results of that interaction ing concepts. This leads to the question of whether the may catalyze yet other interactions. Funding policies disadvantaged, the elderly, and other population groups may include tolling that affects demand and generates will benefit from pricing scenarios or be disenfranchised revenue, which may affect supply. Congestion pricing to from transportation facilities because of it. affect behavior may also generate revenue for additional Finally, technological advances may "leapfrog" poli- capacity--and not necessarily on behalf of the mode cies that are based on today's technology. Many lessons that generated the revenue. have been learned on how to implement technology. Pricing's economic implications are broad. The long- Clearly, the business strategy should lead the technologi- held belief that public goods should be provided by pub- cal applications rather than the reverse. Politics and juris- lic agencies may now come into question. The definition diction are externalities that frequently control the of public goods now becomes a question itself. A possible realization of the application of technology and should 37