New York University Public Law and Legal Theory Working Papers

Document Type

Article

Abstract

THIS PAPER ARGUES THAT THE BEST RESPONSE TO THE TRAGEDY OF ROAD CONGESTION HAS TO RELY ON MARKET-BASED REGULATORY TECHNIQUES AND PUBLIC POLICIES AIMED AT CONTROLLING THE DEMAND-SIDE OF TRANSPORTATION CONGESTION. IN PARTICULAR, AMONG THESE MARKET-BASED REGULATORY TECHNIQUES, ECONOMISTS SEEM TO FAVOR PRICE-BASED INSTRUMENTS (E.G. TAXES AND SUBSIDIES) OVER QUANTITY-BASED INSTRUMENTS (I.E. CAP-AND-TRADE SCHEMES). THE MAIN ARGUMENT OF THIS PAPER IS INSTEAD THAT QUANTITY INSTRUMENTS, SUCH AS TRADABLE PERMITS OF ROAD USAGE AND/OR OF REAL ESTATE DEVELOPMENT, CAN BETTER INTERNALIZE ALL THE EXTERNALITIES THAT ROAD CONGESTION IS CAPABLE OF PRODUCING. THIS PAPER ADVANCES ALSO THE IDEA THAT QUANTITY INSTRUMENTS ARE MORE SUCCESSFUL TOOLS IN ADDRESSING URBAN CONGESTION FOR TWO REASONS: A) THEY ARE MORE POLITICALLY VIABLE; AND B) THEY RESPOND BETTER TO EQUITY CONCERNS.

Date of Authorship for this Version

March 2009