ERP for all?
Hmm, saw the article on the ERP today, and I must admit that it did give me some food for thought.
I must admit that the ERP has been a success. For years, governments have been thinking about the best way to control road traffics, thus the creation of road taxes, vehicle taxes, as well as imposing a high fuel tax. But still, all these measures were not effective at all in cutting down traffic. So economists thought of a solution – that is to charge people for using the roads. Now, this naturally incurred the wrath of plenty of people as people has naturally taken roads to be a public good, that is a free good which everyone deserves to use and not pay for it. However, even though roads are free goods, traffic isn’t. Calculations have shown that the time that could be saved when you travel during traffic jams is worth millions of dollars a year!
So a lot of countries are trying ways to just tax people for using the roads, and Singapore became the first in the world to implement it with the ERP. According to today’s papers, even though there are now more cars on the roads than before (partly because cars are now cheaper), traffic congestion has greatly decreased and more people have chosen to evade the city area or places, which have ERP gantries during peak hours. All these are good news as it means that traveling on the roads have now become better, and COE prices have also dropped.
So is the idea of ERP an optimal solution to everything that has jams, or anything that sees different usage during peak and off-peak periods? Yes and no. It all really depends on the scenario that we are talking about.
For example, I admit that charging different calling rates in the day and night are a good way to discourage people from making long conversational calls during the morning, but it is not exactly entirely justifiable. After all, most people usually make important phone calls in the day anyway. And when you do need to make a phone call, there isn’t really much of an alternative that you can turn to. But charging a lower rate at night does help you to entice people to call on their mobiles at night instead of using landlines.
And similarly, even though higher priced cinema tickets on weekends do encourage more people to watch movies on weekdays (especially students), But the truth is, although you do tempt people to watch movies on weekdays, most of the movie-going crowd are usually only able to watch shows on weekends anyway, so the so-called congestion that you ease is actually minimal. In fact, I doubt that the higher ticket prices have actually discouraged that many people from watching movies on weekends. Oh yes, I’m also totally against the recent movie price hike. In my opinion, the moment that you are screening a show, whether you admit 1 more or 1 less person, the marginal cost is still zero (i.e. the cost of operation is still the same). And I don’t think that overhead costs have really increased that much since most of it was just spent on building the halls. I mean, with the price hikes, the amenities in the theatres are still the same. It seems to me that it is more of a way to boost the cinema operators’ profits.
Yes, that are a lot of instances in which you can really see whether peak/off-peak pricing is good to the consumers, or whether the relevant authorities have misused it. Just look around ya.
I must admit that the ERP has been a success. For years, governments have been thinking about the best way to control road traffics, thus the creation of road taxes, vehicle taxes, as well as imposing a high fuel tax. But still, all these measures were not effective at all in cutting down traffic. So economists thought of a solution – that is to charge people for using the roads. Now, this naturally incurred the wrath of plenty of people as people has naturally taken roads to be a public good, that is a free good which everyone deserves to use and not pay for it. However, even though roads are free goods, traffic isn’t. Calculations have shown that the time that could be saved when you travel during traffic jams is worth millions of dollars a year!
So a lot of countries are trying ways to just tax people for using the roads, and Singapore became the first in the world to implement it with the ERP. According to today’s papers, even though there are now more cars on the roads than before (partly because cars are now cheaper), traffic congestion has greatly decreased and more people have chosen to evade the city area or places, which have ERP gantries during peak hours. All these are good news as it means that traveling on the roads have now become better, and COE prices have also dropped.
So is the idea of ERP an optimal solution to everything that has jams, or anything that sees different usage during peak and off-peak periods? Yes and no. It all really depends on the scenario that we are talking about.
For example, I admit that charging different calling rates in the day and night are a good way to discourage people from making long conversational calls during the morning, but it is not exactly entirely justifiable. After all, most people usually make important phone calls in the day anyway. And when you do need to make a phone call, there isn’t really much of an alternative that you can turn to. But charging a lower rate at night does help you to entice people to call on their mobiles at night instead of using landlines.
And similarly, even though higher priced cinema tickets on weekends do encourage more people to watch movies on weekdays (especially students), But the truth is, although you do tempt people to watch movies on weekdays, most of the movie-going crowd are usually only able to watch shows on weekends anyway, so the so-called congestion that you ease is actually minimal. In fact, I doubt that the higher ticket prices have actually discouraged that many people from watching movies on weekends. Oh yes, I’m also totally against the recent movie price hike. In my opinion, the moment that you are screening a show, whether you admit 1 more or 1 less person, the marginal cost is still zero (i.e. the cost of operation is still the same). And I don’t think that overhead costs have really increased that much since most of it was just spent on building the halls. I mean, with the price hikes, the amenities in the theatres are still the same. It seems to me that it is more of a way to boost the cinema operators’ profits.
Yes, that are a lot of instances in which you can really see whether peak/off-peak pricing is good to the consumers, or whether the relevant authorities have misused it. Just look around ya.
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