Saturday, March 27, 2010

Congestion Tolling

It's hard making people understand that congestion is an unpriced externality, and therefore congestion tolling isn't just about taking money from people it's about reducing the amount of congestion and, yes, converting a bit of lost value due to time wasted in traffic into revenue which could be used to other things, including (admittedly unlikely) rebating it back to people.

It's an unpriced externality because people don't take into account the fact that their car being on the road slows things down just a little bit for everyone else.