Asked by Christopher Severson on Apr 28, 2024
Verified
In London,any motorist entering a particular area in the city center during certain specified times must pay a congestion fee equal to £11.50 per day,with fines for noncompliance rising to as high as £130.The congestion fee is:
A) a Pigouvian subsidy aimed at encouraging the use of city streets.
B) an attempt to internalize the costs of traffic delays and congestion.
C) the wrong policy tool for solving the problem of congestion;instead,motorists should be allowed to make deals to determine when and where they are permitted to drive.
D) likely to cause marginal private benefit from road use to decrease.
Congestion Fee
A congestion fee is a charge imposed on users of a crowded public goods, such as city roads or public transit systems, intended to reduce traffic congestion and improve air quality.
Internalize Costs
The process of ensuring that businesses or individuals take into account the external costs they impose on society in their decision-making.
- Recognize the economic rationale behind charging congestion fees and other similar mechanisms to mitigate negative externalities.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
B
Explanation :
The congestion fee is an attempt to internalize the costs of traffic delays and congestion by imposing a cost on the motorist that reflects the negative externality they impose on others. This incentivizes people to consider alternative modes of transport and reduce traffic and congestion during peak hours.
Learning Objectives
- Recognize the economic rationale behind charging congestion fees and other similar mechanisms to mitigate negative externalities.