Traffic Paradoxes and Economic Solutions

Abstract

ABSTRACT: Previous studies on traffic congestion have emphasized supply-side instruments, such as the expansion of road capacity and improving the management of traffic. However, researchers on transportation have identified several paradoxes in which the usual remedy for congestion—expanding the road system—is ineffective or even counterproductive. This paper presents three paradoxes of traffic flow in their general form and provides economic solutions to overcome them, with an emphasis on demand-side policies by examining the behavior of commuters and using pricing mechanisms. KEYWORDS: Congestion pricing, externality, traffic paradoxe