Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please explain, with the aid of a diagram, the market failure that a congestion tax is addressing and how the tax may improve social welfare.

Please explain, with the aid of a diagram, the market failure that a congestion tax is addressing and how the tax may improve social welfare. ( Assume the tax increases the marginal cost per kilometre travelled).

consider situation below:

The Productivity Commission Report (2017) "Shifting the Dial: 5-year productivity review" Commission suggests that "without policy change, the avoidable social costs of congestion are expected to rise to at least $31.4 billion by 2030." In fact, cities such as London and Singapore have had congestion taxes for a number of years. Congestion pricing, where road tolls are higher during peak period compared with off-peak are aimed at reducing traffic in peak hours.

And here is the report

https://www.pc.gov.au/inquiries/completed/productivity-review/report/4-towns-cities

Thank you very much

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Theories Of Value From Adam Smith To Piero Sraffa

Authors: Ajit Sinha

2nd Edition

0429807716, 9780429807718

More Books

Students also viewed these Economics questions

Question

=+What is the VIF for Age?

Answered: 1 week ago