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After years of terrible traffic congestion, the City of London recently started charging a toll for any car that wanted to enter the city limits.
After years of terrible traffic congestion, the City of London recently started charging a toll for any car that wanted to enter the city limits. Explain how public finance theory would describe the cause of the congestion problem, and explain why imposing a toll can achieve an efficient solution. What does theory say is the level of the toll that will produce the efficient result?
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