Traffic Congestion - Traffic Congestion 5 March 2015...

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Traffic Congestion 5 March 2015
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Traffic congestion is a major problem Costs of traffic congestion Increased travel times—34 hrs/commuter/yr Wasted gasoline—2.2% annual consumption Increased pollution—18 million tons/CO2 Pollution responsible for 8,600 pre-term births
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Congestion occurs when too many cars on road Speed is a function of traffic volume: more cars, lower speeds
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Amount of congestion inefficient due because drivers don’t bear full cost How do we know it is “too much”? Drivers don’t pay full cost of their trip i.e. Driving imposes an externality on others Example Should I drive 15 more minutes to cheaper movie theater? But if I slow down 900 other drivers for 1 second each, social cost 30 minutes.
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Ideal solution: Tolls How can we make drivers consider social cost of their choices? Charge taxes that equal amount of externality First suggested by Alfred Pigou in 1920 Often called congestion pricing Ideal tolls would vary with traffic conditions
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