Road tolls cure form of road pricing and have already been introduced by the M6 spur road “M6 Toll road opens, the barriers at the M6 Toll booths were raised for the first time at 1010 GMT after a ribbon-cutting ceremony at which Transport Secretary Alistair Darling was the guest of honour” stated in the bbc article online and in the article “M6 toll road around Birmingham opened in 2003” , as it means of correcting Market Failure i.e. creating negative externalities created by traffic congestion as shown in the diagram 1.
Market Failure is defined as misallocation of resources as a result of failure in the overproduction of the market mechanism. The price mechanism has three functions the rationing, the signalling and the incentive function. Traffic Congestion is a global issue faced by world economies. It has an impact on each individual, cars give off carbon dioxide fumes "contributes 27.2 million tons of carbon dioxide emissions each year” suggested online website newsroom. Congestion increases the amount of fumes as the cars are stationary for a short period of time. The fume causes global warming which harms the environment in the long term. Therefore traffic congestion is known to cause negative externality i.e. negative externality is the costs produced by the producers, but paid by the individual or to the rest of the society. Other cost arising from traffic congestion includes noise, time wastage for doctors, business opportunity could be missed, loss of live due to an ambulance maybe unable to reach hospitals. There is a lot of fuel wasted during traffic congestion causing pollution which is borne by the owner, leading to global warming by damaging the environment.
MSC Welfare loss
Output Diagram 1
The diagram shows negative