If there is some cost to the level of congestion then people who do not receive a benefit in excess of that cost will not be on the road in the first place – we agree here.

However, you are suggesting that, if we have a substitute road and agents that value different roads differently (which is the essential assumptions), there may be multiple equilibrium between the allocation of traffic. In this case a toll may help push us towards a pareto superior outcome.

I can see the possibility – but I would need to see the example a bit more explicitly before I feel like I understand it 😉

I think the type of congestion they are looking at taxing is the “stuck in traffic doing 5kph” congestion – they are looking at speeding up travel, not slowing it down.

“The congestion externality per se seems to me to be an outcome-oriented argument: congestion charges have been seen to reduce congestion, therefore if we want to reduce congestion that is one proven way to do so. It’s better than the pave-the-earth model of building more roads, which is proven not to work but is still strangely popular”

As I said before – there are other externalities that we can hit. Usually we hit these with a petrol tax. However, the argument for a direct congestion externality is a bit more tenuous – we need a “better argument” before we can come up for this type of justification for tolls.

“However, a person’s decision to be fit also benefits a host of involved third parties, like all the taxpayers in the country they live in who pay lower taxes as a result of their diminished health care costs”

The types of externalities that stem from lower taxes is a difficult one – namely because we have to ask “is society paying it through taxes because they associate some arbitrary social value from it”. Before we answer that question it is hard to call lower health care bills an externality (although I often have myself 🙂 ).

For some people a congestion free road is very valuable, but for some people its not so valuable (using the un-tolled (congested) road is not very valuable at all, but still more valuable than 0 – so they use it when it is un-tolled and help clog things up). However if they didn’t use it they wouldn’t be much worse off, but the people who really value using the road in an uncongested state would be much much happier (and would happily pay the toll in exchange for the road being much less congested). Imposing a toll gets the people who value the road not much off it, and gives the people who really value the uncongested road the ability to realise that value. The net benefit is positive and society is better off as a result?

Feel free to impose some rigour to this stream of consciousness rambling….

Well yes, by definition. However, a person’s decision to be fit also benefits a host of involved third parties, like all the taxpayers in the country they live in who pay lower taxes as a result of their diminished health care costs (which of course reduces GDP in the short term and thus should not be encouraged – economic growth at all costs).

The congestion externality per se seems to me to be an outcome-oriented argument: congestion charges have been seen to reduce congestion, therefore if we want to reduce congestion that is one proven way to do so. It’s better than the pave-the-earth model of building more roads, which is proven not to work but is still strangely popular (look up “induced traffic” for one reason why).

The motorist lobby irritate me with their lies. All the “build more roads where there are already roads” reasons fall apart if you look at them. It has almost nothing to do with effective or efficient transport and everything to do with their self-image as motorists and umwillingness to see that driving is often a poor choice[1]. Otherwise they’d be all for things like public transport and freight rail instead of vehemently opposed. I mean, every person who walks to work is one less person gumming up the roads, so you’d expect active transport campaigns to be at least considered on a cost-benefit basis compared to building more roads… but that doesn’t seem to happen. Likewise, the “congestion cost” never seems to get applied to public transport – in Melbun there’s been vehement arguments for building more motorways because of “congestion costs” but the same people are equally vehemently opposed to that analysis being done for public transport. Their reasons in both cases make the same amount of sense when applied against them 🙂

[1] one of the classic disproofs of man as rational economic actor is the cost of motoring. For instance, many people would find it cheaper to use taxis than to own a car.

Does congestion cause accidents? If so I’m not sure that congestion related accidents are particularly costly – as they must be involve very slow speeds.

“Arguably there will be an even later cost as fitter, healthier people live longer in the medically intensive part of their old age. People who already use active transport and public transport will benefit from less motor traffic – congestion, pollution and amateur drivers”

Firstly, some of these “externalities” are already internalised – a persons decision to be fit benefits themselves, not some uninvolved third party. However, I definitely agree with you that there may well be other externalities from the use of motor vehicles – but the congestion charge has been suggested as a way of dealing with a congestion externality. However, this specific externality may not actually exist – and so can’t really be used to justify a toll.

Congestion charging will benefit (for example) some schoolchildren who will now not be driven to school and others who will now not be killed by motorists. It will also reduce pollution intensity especially around the inner city and that benefits anyone in the area. The health system will benefit from reduced demand – initially through fewer motorists crashing into people but later through a healthier population (less car use means more active transport). Arguably there will be an even later cost as fitter – healthier people live longer in the medically intensive part of their old age. People who already use active transport and public transport will benefit from less motor traffic – congestion%2C pollution and amateur drivers. And so on…

I’m using “benefit” here meaning “an imposed cost is removed”.

(oooh, I do like the “five minutes to edit your post” thingy. That’s excellent. Well, if it worked it would be excellent. Bugger.

Spaces come up as %20 afterwards

Agnitio: hmm I just used it and it works, wonder what is going on

100% agreed – as a way of financing a road, or road maintenance, a toll makes good sense.

However, my goal here was solely to explore the use of a toll as an externality correcting device – as those other authors have suggested.