Thursday, March 27, 2008

Help is on the way

The traffic congestion that comes with unpriced highway access is many economists' favorite example of a negative externality. The availability of electronic toll collection devices suggests that transactions costs are no longer a barrier -- and we now have a policy failure.

And it suggests a market opportunity. The WSJ's Walter Mossberg reports ("Dash's Car Navigator Gives Smart Directions, If Others Participate" gated, excerpted below) that there are new "smart" navigation devices on the market that can interact with other like devices in use on the system so that it can monitor real-time nearby congestion -- and plan/instruct accordingly. It works best, of course, if there are enough other users of the system. A new positive network externality to counter an old negative externality.

It almost makes the standard peak-load pricing prescription sound boring.
As smart as in-car navigation devices are, they could be
smarter. They could talk to each other via the Internet and share information on
how fast traffic is moving on the roads they have just traveled. And they could
also use the Internet to let you search for places of interest, get map updates,
or even receive new destinations wirelessly.

Starting this week, just such a smarter navigation box is
hitting the market. Called the Dash Express, this $400 product looks a lot like
units from better-known firms such as Garmin and Magellan. Like them, it uses
GPS satellite signals to locate your car on an easily seen map, and to route you
to destinations and places of interest, using both visual and spoken

But, unlike any other in-car navigation device I've seen, each
Dash Express, from a Silicon Valley start-up called Dash Navigation, becomes
part of a network, connected to the company via the Internet. Each device not
only receives and displays information, but transmits it as well, acting as a
"probe," as Dash calls it, to measure local traffic speeds. This information is
compiled by the company and then broadcast back to all other Dash units in your
area, almost instantly painting streets on your map with color codes to indicate
traffic speeds.

I've been testing a Dash Express in and around my home base of
Washington, D.C., and, while it isn't perfect, I like it a lot. If the company
sells enough units to create a solid network, Dash could radically improve
in-car navigation.