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The Greater Edmonton Region is attempting to reduce air pollution with several possible alternative policies (1) levying fees on motor vehicles by type and weight,
The Greater Edmonton Region is attempting to reduce air pollution with several possible alternative policies (1) levying fees on motor vehicles by type and weight, (2] increasing gasoline taxes, (3) putting tolls on bridges over the Morth Saskatchewan River, and (4) taxing parking facilities in the downtown core. You are to examine the WTP of the two options a tax on vehicles and a toll on bridges and recommend the one that is better for the region. After surveying 200 representative samples, you found that the average WTP for vehicle levy is 55 per 100 kg and examining vehicle weights and the number of vehicles on the road for a year, you found that the aggregate annual WTP is 515 million. On the other hand, the toll bridge option says the WTP for each bridge is 51 per vehicle with an aggregate annual WTP of 536.5 million. If the pollution reduction impact of both policies is the same, but the enforcement cost of vehicle levy is 510 million more than the bridge toll, which policy do you recommend and why? Explain
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