Additional highway traffic

Question

Quizplus · Accepted Answer

Additional highway traffic creates negative externalities when the highway is congested, such as increased travel time, air pollution, and noise pollution. These negative effects are not fully borne by the drivers causing the congestion and spill over to other individuals who are not directly involved in the use of the highway. Therefore, there is a market failure that requires governmental intervention to internalize the externalities through policy measures such as congestion pricing, tolls or fuel taxes to reduce the level of traffic congestion and incentivize individuals to reduce their vehicle use.

Additional Highway Traffic