A tax on the likelihood of being in a collision will help internalize the external costs of collisions.

Question

Quizplus · Accepted Answer

A tax on the likelihood of being in a collision, such as a higher insurance premium for high-risk drivers, would encourage safer driving behavior and encourage individuals to take responsibility for the external costs of their actions (in this case, the costs associated with collisions). By internalizing these costs, individuals would be incentivized to drive more safely and take precautions to avoid collisions, ultimately reducing the overall number and severity of collisions on the road.

A Tax on the Likelihood of Being in a Collision