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Internalizing Externalies & Public Goods Term Paper

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The motorists especially of passenger vehicles will always try to find alternative ways or routes to reach their destinations leading to them using pedestrian footpaths and side streets and this affects the neighbouring structures. When a footpath turns out to be used as a road the effects to the residents is increased real estate prices due to the proximity to means of transport. The dwellers therefore experience increased living standards.

In trying to solve the problem of traffic congestion, governments have tried to come up with a market-based solution which involves expansion of roads and building of fly overs that can be used by all citizens. Private companies have been contracted to facilitate efficient construction of the roads. This strategy is efficient in that vehicles that have no business in cities but have to pass through would have an express way while the carrying capacity of a road would have increased lane. In certain cases, the subway vehicles would...

The use of public transport is beneficial to a large number of people when more consumers are accommodated though can become partially rivalry when the consumers exceed a certain point. The strategy is efficient in that the negative externalities would be greatly reduced though the application of fees excludes other people from enjoying the benefits.
Conclusion

Traffic congestion is a major hindrance to the productive capacity of a country and solution that foresees results in terms of returns have to be implemented. The government comes in by ensuring provision of effective public goods that is beneficial to many and discourages the use of private goods whose externalities are a major disadvantage. The residents should be receiving the selected strategy as it would increase the efficiency of their productive activities reflected in the overall economy of the country.

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