Thursday, November 24, 2005

Naive traffic economics

Arnold Kling writes:
From my perspective, with the Washington DC area one of the three worst regions in the country for traffic, the anti-congestion motivation for taxing gasoline is worth considering. On the other hand, I think that taxing congestion-causing behavior directly may be a better approach.
But isn't the even better policy to reduce the costs of alternative modes of transportation (public transport)? A very naive welfare calculation would suggest that improving public transportation to make it faster and more convenient and hence reducing congestion and so reducing travel times everywhere would do more to enhance welfare than making efficient transport more expensive, even given that government could compensate people with toll revenue because there is the deadweight loss of "distorting" prices by taxing gasoline (though I suspect that the naivite lies in assuming that you can actually find non-distorted prices in transportation). And objections that public transportation systems always lose money aren't convincing for I don't think the marginal road turns a profit either.

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