Congestion Charges: the solution to traffic problems?
University of Amsterdam
Time & Place
Wed, 23 May 2007 18:00:00 NZST in University of Canterbury
While Aucklanders suffering from traffic congestion in the central business district rally against congestion charges, economists see congestion charges as an ideal solution to Auckland's problems. Why do economists like road charges so much? Mark Blaug, Professor of Economics at the University of Amsterdam and Professor Emeritus at the University of London, tells us in this year's Condliffe Memorial Lecture.
According to Professor Blaug, traffic congestion in large cities provides a classic example of inefficiency caused by negative external effects. When roads reach their carrying capacity, each additional driver on the road slightly increases the amount of time it takes for every other driver to reach his destination. Since each driver only weighs his own costs when choosing his routes and times, we will expect that too many drivers get onto the roads at rush hour as compared to a social optimum. The social costs of driving at peak time are greater than the private costs. How can we solve the problem? Governments have a variety of potential solutions at their disposal ranging from legal restrictions to road pricing. Road pricing by electronic measuring devices is now technically feasible and relatively inexpensive to install. Allowing road access prices to change with the level of congestion harnesses the invisible hand of the market to ease traffic woes.
The Condliffe Memorial Lecture was established by the Department of Economics at the University of Canterbury in 2005 to honour John Bell Condliffe, who became the first Professor of Economics at Canterbury University College in 1921. The Lecture series brings leading economists to Canterbury to provide a public lecture highlighting their recent work and its relevance to the broader business and policy community.
Professor Mark Blaug needs no introduction to economists. The world's foremost scholar in the history of economic thought and economic methodology, Professor Blaug tells economists how to engage in economic analysis. His text, Economic Theory in Retrospect, is available in nine languages and has been adopted throughout the world in teaching the history of economic thought. He has been honoured as a Distinguished Fellow of the History of Economics Society and as an Elected Fellow of the British Academy. Professor Blaug has served as consultant to the OECD, UNESCO, UNECAFE, UNDP, UNIDO, ILO, the World Bank, and many other distinguished foundations, institutes and organisations. In addition to his foundational work in economic methodology and the history of economic thought, Professor Blaug has made seminal contributions in the economics of education and the economics of the arts.