Monday, December 3, 2007

The value of road-pricing

Road-pricing, like the soon-to-be popular Newton charge, is not just the right thing to do, it has provable economic validity. This Common Tragedies post explains the "virtuous circle" of reducing/ending the subsidy for car travel and using the savings/revenue for public transit.

Here's the pithy, if wonky, core of the argument:

Mass transit systems are a network good with positive externalities — beyond reducing congestion, buses are a far less polluting alternative than cars — and hence should be subsidized to achieve the socially optimal level of provision. Public roads, on the other hand, are a common pool resource whose value is rapidly degraded when given away for free.

If we stop plowing money into our roads (or spending money to plow them?), we can build a useful network of public transit that can reduce our car-dependency.

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