All over the world, roads, especially in cities, are becoming blocked with too much traffic, exacerbating pollution and causing frustation to people, industry and government. Clearly road space is a scarce commodity and a mechanism is now required to allocate road space among the growing number of users. Despite potentially widespread and far-reaching effects, many economists now believe that road pricing is the best way to allocate road space.
a) Consider the relevance of the theory of externalities to the problems of pollution and congestion associated with vehicles use.
b) Explain the ways in which road pricing will change road users’ behaviour.
c) Explain whether you think road pricing is a sensible step forward or an unfair tax ?
Nowadays, traffic is extremely dense on roads, especially in the big cities. Due to this intense traffic, streets are very often congested and cities can be almost entirely blocked. Moeover, road congestion prevents industries to work effectively.
This phenomenon is a major cause of pollution and consequently of health problems in lots of countries. As the number of users is continuously growing, a lot of economists now believe that a congestion charge is the only solution able to solve this problem.
However, will a congestion charge be accepted by road users without an important and mass refusal? Likewise, maybe this kind of tax will be really unfair for people who already earn very low salaries ?
This written essay will comment on this problem and explore different solutions for this major and current difficulty. In order to investigate this topic I will analyse following points:
Firstly the issues of externalities associated to t ...