Answer to Question #69910 in Macroeconomics for Amber

Question

Many economists have argued that a form of ‘congestion tax’ ought to be imposed on the motorists who use their cars on busy roads, to take account of the external costs they impose on other road users and pedestrians. List and compare the advantages and disadvantages of the following three measures to reduce congestion in Australia:

Answer 1

Market economics theory, which encompasses the congestion pricing concept, postulates that users will be forced to pay for the negative externalities they create, making them conscious of the costs they impose upon each other when consuming during the peak demand, and more aware of their impact on the environment.
Advantages:
Implementation of congestion pricing has reduced congestion in urban areas. Improve the urban environment, increase road safety and prioritise public transport, pedestrian and cycle traffic, less air pollution.
Disadvantages:
Critics maintain that congestion pricing is not equitable, places an economic burden on neighboring communities, has a negative effect on retail businesses and on economic activity in general, and represents another tax levy. Reducing the effective capacity of the road network. Inequality issue: A main concern is the possibility of undesirable distribution repercussions because of the diversity of road users. The use of the tolled road depends on the user's level of income. Where some cannot afford to pay the congestion charge, then this policy is likely to privilege the middle-class and rich. Even the transport economists who advocate congestion pricing have anticipated several practical limitations, concerns and controversial issues regarding the actual implementation of this policy. As summarized by Cervero:
"True social-cost pricing of metropolitan travel has proven to be a theoretical ideal that so far has eluded real-world implementation. The primary obstacle is that except for professors of transportation economics and a cadre of vocal environmentalists, few people are in favor of considerably higher charges for peak-period travel. Middle-class motorists often complain they already pay too much in gasoline taxes and registration fees to drive their cars, and that to pay more during congested periods would add insult to injury. In the United States, few politicians are willing to champion the cause of congestion pricing for fear of reprisal from their constituents. Critics also argue that charging more to drive is elitist policy, pricing the poor off of roads so that the wealthy can move about unencumbered. It is for all these reasons that peak-period pricing remains a pipe dream in the minds of many."
Sources:
Cervero, Robert (1998). The Transit Metropolis. Island Press, Washington, D.C. pp. 67–68. ISBN 1-55963-591-6. "Setting the prices right"
Contemporary Approaches in Congestion Pricing: Lessons Learned from the National Evaluation of Congestion Pricing Strategies at Six Sites. FHWA. August 2015