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Tuesday, February 28, 2012

Can you imagine DAYS long commutes?

http://www.economist.com/blogs/freeexchange/2011/03/externalities

The above link is an editorial from The Economist Website explaining this particular author's method of internalizing the externalities that coincide with extreme traffic congestion in places like Beijing.  Maybe some of you have heard of the traffic jams in the city that can last for DAYS.  Since we live in Colorado, this kind of traffic is unimaginable.

As we have discussed in class, roads and highways are better described as club goods, one in which we pay license, registration and a myriad of other fees to use (legally).  The author of this article explains his solution in alleviating congestion: paying a toll.  However, the amount of the toll is based on the demand of the road at any given time.  In times where the demand is high and congestion is rising, the toll will shoot up, deterring those who are not able or willing to pay from driving at all.  Conversely, the toll lowers during lower demand times.  

The issue with roads in congested cities is of course that it is difficult and nearly impossible to create more roads (moving buildings and putting roads through private yards wouldn't go over well), so we are looking at a fixed supply.  For the market to become efficient, the price would naturally go up when the demand for the good goes up and vice versa.  The implementation of tolls mimics this, allowing for efficient utilization of the roads with people who have important trips to make more likely to use the road than the person who just wants to go to the store to go buy a bag of Cheetos.

Furthermore, the money made from tolls can go towards building a better public transit system.  Light rails, buses, trains, etc can help those to travel that can't afford to pay the high tolls, further reducing congestion.

Overall, I feel this is a viable policy.  It may hurt initially for those who are inconvenienced and must figure out cheaper and more efficient ways of getting around, but eventually the system will sort of smooth everything out, eventually benefiting everyone in the city.  While the concern is certainly whether or not government can do all of this efficiently without causing further transportation problems, I can't imagine it can become an absolute failure.  It has to be better than days stuck in grid lock.

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