Transportation

Transportation

Congestion tax

Congestion is considered an externality negative by economists. An externality occurs when a transaction causes costs or benefits to others, usually but not necessarily due to the use of a public good. For example, the use of motor vehicles causes air pollution; thereby imposing costs or negative externalities on others they use the public good air. Congestion fees is an efficient pricing strategy that allows users who cause the externality pay more for the use of this public good, thus paying the true social cost and maximizing the net benefit to society (Estache 2004).

In the case of some public services, particularly roads, is considered that the congestion is caused by an inadequate recovery of the costs of public good for users because the perceived cost is zero. So if it is provided free of charge, users tend to demand more of that good, and even waste it, compared with a well for which if they have to pay and where the price reflects the costs of providing the service. In this case the application of congestion pricing is justified as a means to distribute a scarce resource so that its use is most beneficial for society, and depending on the willingness to pay of users for this resource (John Robert Meyer 1999).

Thanks to technological advances in the field of electronic toll collection , is now spreading the use of congestion pricing to control vehicle access to central urban areas, collection popularly known as "urban toll." However, its practical application in this context has been limited because of the controversy and public debate that this policy entails.

Pros of a Congestion Tax are as it worries by business owners that the tax will discourage shoppers from coming into the affected areas. It adds to the costs of driving. It is another ...