Too expensive to meter: The influence of transaction costs in transportation and communication

David Levinson, Andrew Odlyzko

Research output: Contribution to journalArticlepeer-review

28 Scopus citations


Technology appears to be making fine-scale charging (as in tolls on roads that depend on time of day or even on current and anticipated levels of congestion) increasingly feasible. Such charging also appears to be increasingly desirable, as traffic on roads continues to grow and costs and public opposition limit new construction. Similar incentives towards fine-scale charging also appear to be operating in communications and other areas, such as electricity usage. Standard economic theory supports such measures and technology is being developed and deployed to implement them. But their spread is not very rapid and their prospects for the future are uncertain. This paper presents a collection of sketches, ranging from ancient history to very recent developments, that illustrate the costs that charging imposes. Some of those costs are explicit (in terms of the monetary costs to users and the costs of implementing the charging mechanisms). Others are implicit, such as the time or the mental processing costs of users. These argue that the case for fine-scale charging is not unambiguous and that in many cases such charging may lead to undesirable outcomes.

Original languageEnglish (US)
Pages (from-to)2033-2046
Number of pages14
JournalPhilosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences
Issue number1872
StatePublished - Jun 13 2008


  • Collection costs
  • London Underground
  • London railways
  • Telecommunications
  • Transaction costs
  • Transport


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