Monday, October 06, 2008


Since the point isn't made clearly often very often, the point of congestion pricing is that congestion is an unpriced negative externality. It isn't simply that roads shouldn't be free, it's that traffic volumes, especially at peak hours, are greater than what they would be at a social optimum. The point is that when you get on a highway or enter a crowded city at peak traffic times, you're slowing down traffic just a little bit for everyone else on the road at that time. Because people don't take that extra social cost into account when they get on the road, there are "too many" drivers on the road. Congestion pricing is a way of converting wasted "waiting in traffic time" into money which could be spent on SUPERTRAINS or whatever, along with reducing the excess traffic by aligning private/social costs of driving more closely.