When Should Carpools in HOV Lanes be Encouraged?

A variety of policies to encourage carpooling in high-occupancy vehicle (HOV) lanes have been adopted by state and local governments in the US. These policies can either increase or decrease total congestion depending on whether congestion relief in mainline lanes outweighs increased HOV lane congestion. We estimate congestion cost functions for mainline and HOV lanes in Los Angeles and find congestion costs vary substantially across routes and hours of the day. Costs also vary substantially during a single peak hour from day to day on each route. Whether encouraging or discouraging HOV lane use lowers costs critically depends on realtime traffic conditions. Importantly, entry of new drivers via induced travel demand can counteract the congestion benefits of increased carpooling. ∗The authors thank Tania Barham, Harrison Fell, Craig McIntosh, Edward Morey and seminar participants at the Association of Environmental and Resource Economists summer meeting, LAMETA Montpellier, the NBER Summer Institute, Resources for the Future, Stanford University, the Triangle Resource and Environmental Economics Seminar Series and the University of Pittsburgh for helpful comments. Department of Economics, University of Colorado at Boulder, Box 0256 UCB, Boulder, CO 80309. Email: [email protected], Telephone: (303) 735-0220, Fax: (303) 492-8960