Congestion Externalities - Is Road Pricing the Way Forward?

Graham Watson

31st January 2022

Could road pricing could be the answer to both environmental concerns and serve as a way of replacing fuel duty and road tax?

The technology's there - and it would allow road users to be charged according to the distance they drove and nuanced to reflect different levels of congestion to some degree.

However, any assessment of policy needs to be aware of the opportunity cost, likelihood of government failure and distributional effects of such a change.

Likely arguments against the change are going to relate to rural drivers - who have to drive longer distances - and poorer urban drivers who live in outlying, less expensive suburbs and have to drive more than wealthier people who live in more handily placed areas.

@GwynTopham writes in this Guardian piece that "Singapore has arguably come closest to a comprehensive road-pricing scheme"

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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