Autos And Highways
Chapter 11- Autos and Highways
• Congestion: Equilibrium versus Optimum traffic Volume
o The total cost of a commuting trip is the sum of the monetary and time cost
o The demand curve is a marginal benefit curve ~ shows how much the marginal traveler is willing to pay for the highway trip
o Congestion Externality: the marginal driver slows traffic and increases travel time, forcing other drivers to spend more time on the road ~ it increases with traffic volume
o The external trip cost equals the monetary value of the congestion externality
o External trip cost increases with traffic
o Private trip cost (average travel cost)- is the travel cost incurred by the individual commuter, defined by the sum of the monetary cost and the private cost (trip time * opportunity cost of travel time)
o Social Trip Cost ( marginal travel cost): is the sum of the private cost and the external trip cost
o On graph: the social-cost curve lies above the private-cost curve with the gap......
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