You should be able to answer the following question by the end of this worksheet;

"Traffic congestion is an example of market failure."

• Explain the meaning of this statement
• how might the increase in road congestion be explained
• examine the likely effects of one policy designed to reduce traffic congestion

What are the social costs associated with car congestion?

Use the Tackling traffic congestion simulation to answer the following questions.

1. Define an externality.
2. Draw a diagram to illustrate a consumer created externality.
3. Describe the pattern of traffic in the UK over the last 40 years.
4. What information can you find concerning the potential solutions for traffic congestion?

What are the potential solutions to traffic congestion?
Outline the possible disadvantages of these solutions.

Use the Tackling traffic congestion simulation to answer the following questions.

For each of the following policies, (i) increase in road charges and (ii) the introduction of a subsidy on public transport, answer the questions;

1. Name the policy.
2. Discuss why it should reduce the level of traffic congestion.
3. What are the disadvantages of the policy?
4. What happened to
   1. car traffic
   2. bus traffic
   3. underground traffic?
5. Would you expect this outcome? Explain your answer

Can traffic congestion be reduced?

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