Essay Plans

How can the price mechanism be used to control traffic congestion in towns?

POINTS:

  1. Begin by stating the expected amount of road vehicles on UK road by 2000. The figure does not have to be that accurate merely realistic - say, 30 million.

  2. If road building/improvement schemes does not keep pace (the almost complete traffic standstill in London in June 1989 owing to the rail strike would suggest that roads cannot take any extra pressure - pedestrians whizzed by sleek limousines) then congestion will result.

  3. This congestion incurs costs: road depreciation, car depreciation, delays to private cars as well as buses.

  4. The price mechanism therefore should allocate resources to take into account these costs. The motorist ignores the costs he incurs on others (traffic jams) and therefore will use roads as long as the costs (petrol, depreciation of the car) are less than the marginal private benefits (flexibility).

  5. This question is therefore concerned with a divergence between private and social costs (usually remedied by taxation - see items on pollution in many economic textbooks).

  6. Draw a diagram illustrating the divergency referred to in (5) also a diagram illustrating subsidies as this question is in two parts - penalise the motorist and encourage the alternative (public transport).

  7. This idea is the basis for 'Park and Ride' schemes in towns today.

  8. Problems

    • Congestion is not always continuous (except in London and most motorways)
    • Assuming no direct transferral from taxes on motorists to subsidies on public transport, some of the subsidies will come from non-road users.

  9. Possible Ideas

    • Toll to enter a town (penalise shop owners) but this may be impractical and expensive to administer
    • Parking meters on a graduated scale could penalise the motorist who parks in the city centre.
    • Free car parking would reduce congestion and help shopkeepers but it may increase traffic as this would be an incentive for people to drive to a particular area. Car parking fees could be increased to gain revenue for the city (to spend on road repairs etc) and this may discourage parking/driving in the city.

  10. Other ideas could include

    • Complicated one way systems that effectively discourage all but local residents from riding round town (as in Oxford)
    • Increase petrol tax
    • Lead free petrol at a lower price to at least reduce some of the pollution resulting from congestion (this is now done)
    • Free car parking only for multiple occupancy cars.

  11. Finally, any scheme that includes the wider considerations of social costs must include the effect on other groups:

    • Pedestrians
    • Shopkeepers
    • Employees (car park attendants)
    • Traffic police
    • Cyclists

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