Editing Transport economics (section)

=== Traffic congestion ===
{{main|Traffic congestion}}
[[File:I-80 Eastshore Fwy.jpg|thumb|right|200px|Typical traffic congestion in an urban freeway. Shown here is [[Interstate 80|I-80]] [[Eastshore Freeway]] in [[Berkeley, California|Berkeley]], California.]]

Traffic congestion is a negative externality caused by various factors. A 2005 American study stated that there are seven root causes of congestion, and gives the following summary of their contributions: bottlenecks 40%, traffic incidents 25%, bad weather 15%, work zones 10%, poor signal timing 5%, and special events/other 5%.<ref>{{cite web|title=Traffic Congestion and Reliability: Trends and Advanced Strategies for Congestion Mitigation|date=1 September 2005|url=http://www.ops.fhwa.dot.gov/congestion_report/congestion_report_05.pdf|publisher=U.S. Federal Highway Administration|access-date=2008-02-28|archive-date=29 June 2019|archive-url=https://web.archive.org/web/20190629125056/https://ops.fhwa.dot.gov/congestion_report/congestion_report_05.pdf|url-status=dead}}</ref> Within the transport economics community, [[congestion pricing]] is considered to be an appropriate mechanism to deal with this problem (i.e. to internalise the externality) by allocating scarce roadway capacity to users. Capacity expansion is also a potential mechanism to deal with traffic congestion, but is often undesirable (particularly in urban areas) and sometimes has questionable benefits (see [[induced demand]]). [[William Vickrey]], winner of the 1996 [[Nobel Memorial Prize in Economic Sciences|Nobel Prize]] for his work on "[[moral hazard]]", is considered one of the fathers of congestion pricing, as he first proposed it for the [[New York City Subway]] in 1952.<ref>{{Cite web|author= Vickrey, William | year=1992|url=http://www.vtpi.org/vickrey.htm|title= Principles of Efficient Congestion Pricing|access-date=2008-02-26|publisher = Victoria Transport Policy Institute}}</ref>
In the road transportation arena these theories were extended by [[Maurice Allais]], a fellow Nobel prize winner "for his pioneering contributions to the theory of markets and efficient utilization of resources", [[Gabriel Roth (economist)|Gabriel Roth]] who was instrumental in the first designs and upon whose [[World Bank]] recommendation<ref>{{Cite book | last = Walters | first = A. A. | year = 1968 | title = The Economics of Road User Charges| publisher = World Bank Staff Occasional Papers Number Five, Chapter VII, Washington, D.C. pp. 191–217| isbn = 978-0-8018-0653-7}}</ref> the first system was put in place in Singapore. [[Reuben Smeed]], the deputy director of the [[Transport Research Laboratory|Transport and Road Research Laboratory]] was also a pioneer in this field, and his ideas were presented to the British government in what is known as the [[Smeed Report]].<ref>{{cite book |last=Smeed |first=R.J. |year=1964 |title=Road pricing: the economic and technical possibilities |url=https://archive.org/details/op1265810-1001 |publisher=HMSO}}</ref>

Congestion is not limited to road networks; the negative externality imposed by congestion is also important in busy public transport networks as well as crowded pedestrian areas, e.g. on the London Underground on a weekday or any urban train station, at peak times. There is the classical excess in demand compared to supply. This is because at peak times there is a large demand for trains, since people want to go home (i.e., a derived demand). However, space on the platforms and on the trains is limited and small compared to the demand for it. As a result, there are crowds of people outside the train doors and in the train station corridors. This increases delays for commuters, which can often cause a rise in stress or other problems.

==== Congestion pricing ====
{{main|Congestion pricing|Road pricing}}
[[Image:ERPBugis.JPG|thumb|right|200px|[[Electronic Road Pricing]] Gantry at North Bridge Road, Singapore]]

Congestion pricing is an [[Pareto efficiency|efficiency pricing]] strategy that requires the users to pay more for that public good, thus increasing the welfare gain or net benefit for society.<ref>{{Cite journal | last = Button | first = Kenneth J. | year = 1993 | title = op. cit| pages = 153}}</ref><ref>{{Cite journal|author1=Small, Kenneth A. |author2=Verhoef, Erik T. | title = op. cit| year = 2007| pages = 120}}</ref> Congestion pricing is one of a number of alternative [[Supply and demand|demand side]] (as opposed to [[supply side]]) strategies offered by economists to address congestion.<ref name="prm_winter_1995">{{cite journal |title=Congestion Control and Demand Management |author1=Sheldon G. Strickland |author2=Wayne Ber |name-list-style=amp |date=Winter 1995 |volume=58 |issue=3 |journal=Public Roads Magazine |publisher=U.S. Federal Highway Administration |url=http://www.tfhrc.gov/pubrds/winter95/p95wi1.htm |access-date=2008-02-28 |archive-url=https://web.archive.org/web/20080317165147/http://www.tfhrc.gov/pubrds/winter95/p95wi1.htm |archive-date=17 March 2008 |url-status=dead |df=dmy-all }}</ref> Congestion pricing was first implemented in [[Area Licensing Scheme|Singapore]] in 1975, together with a comprehensive package of [[road pricing]] measures, stringent car ownership rules and improvements in mass transit.<ref>{{Cite book |author1=Small, Kenneth A. |author2=Verhoef, Erik T. | year = 2007 | title = The Economics of Urban Transportation |url=https://archive.org/details/economicsurbantr00smal |url-access=limited | publisher = Routledge, England| isbn = 978-0-415-28515-5 | pages = [https://archive.org/details/economicsurbantr00smal/page/n164 148] }}</ref><ref>{{cite web | url=http://www.move-forum.net/documenti/B_06032003170931.pdf | title=Road pricing Singapore's experience | author = Chin Kian Keong | date=23 October 2002 | publisher = Third Seminar of the IMPRINT-EUROPE Thematic Network: “Implementing Reform on Transport Pricing: Constraints and solutions: learning from best practice” | access-date=2008-04-16|archive-url = https://web.archive.org/web/20080410123530/http://www.move-forum.net/documenti/B_06032003170931.pdf <!-- Bot retrieved archive --> |archive-date = 10 April 2008}}</ref> Thanks to technological advances in [[electronic toll collection]], Singapore upgraded its system in 1998<ref>{{cite web  | url=http://www.lta.gov.sg/motoring_matters/index_motoring_erp.htm  | title=Electronic Road Pricing  | publisher=Land Transport Authority (Singapore). Website oficial  | access-date=2008-04-16  | archive-url=https://web.archive.org/web/20080410143342/http://www.lta.gov.sg/motoring_matters/index_motoring_erp.htm  | archive-date=10 April 2008  | url-status=dead  }}</ref> (see [[Electronic Road Pricing|Singapore's Electronic Road Pricing]]). Similar pricing schemes were implemented in [[Rome#Motor Traffic Limited Zone (ZTL)|Rome]] in 2001, as an upgrade to the manual zone control system implemented in 1998;<ref>{{cite web| url=http://www.cfit.gov.uk/map/europe-italy-rome.htm| title=Road Charging Scheme: Europe – Italy, Rome| publisher=UK Commission for Integrated Transport| access-date=2008-04-16| url-status=dead| archive-url=https://web.archive.org/web/20080411181654/http://www.cfit.gov.uk/map/europe-italy-rome.htm| archive-date=11 April 2008| df=dmy-all}}</ref><ref>{{cite web| url=http://www.progress-project.org/Progress/rome.html| title=The history of Limited Access Zones in Rome| publisher=PRoGR€SS Project| access-date=2008-04-16| url-status=dead| archive-url=https://web.archive.org/web/20080309210332/http://www.progress-project.org/Progress/rome.html| archive-date=9 March 2008| df=dmy-all}}</ref>
London in 2003 and extended in 2007 (see [[London congestion charge]]); [[Stockholm]] in 2006, as seven-month trial, and then on a permanent basis since August 2007<ref>{{cite web | url=http://www.vv.se/templates/page3____17154.aspx | title=Congestion tax in Stockholm | date=21 August 2007 | publisher=Swedish Road Administration | access-date=2008-04-16 | url-status=dead | archive-url=https://web.archive.org/web/20070302045327/http://www.vv.se/templates/page3____17154.aspx | archive-date=2 March 2007 | df=dmy-all }}</ref> (see [[Stockholm congestion tax]]).