In London, any motorist entering a particular area in the city center during certain specified times must pay a congestion fee equal to £8, with fines for noncompliance rising to as high as £120.The congestion fee is:
A)an example of a Pigouvian tax aimed at regulating the use of the common resource of city streets.
B)an attempt to internalize the costs due to traffic delays and congestion that are created by drivers in the specified area.
C)the wrong policy tool for solving the problem of congestion; instead, motorists should be allowed to make deals to determine when and where individuals are permitted to drive.
D)an example of a Pigouvian tax aimed at regulating the use of the common resource of city streets and an attempt to internalize the costs due to traffic delays and congestion that are created by drivers in the specified area.

Question

Quizplus · Accepted Answer

The congestion fee in London is a Pigouvian tax because it is aimed at regulating the use of the common resource of city streets, and it is also an attempt to internalize the costs due to traffic delays and congestion that are created by drivers in the specified area. By charging a fee for entering the area during certain times, motorists are encouraged to consider alternative modes of transportation or to alter their driving behavior, leading to a reduction in congestion and its associated costs.

In London, Any Motorist Entering a Particular Area in the City