By Wikipedia and Staff Reporters
***
***
Congestion pricing or congestion charges is a system of surcharging users of public goods that are subject to congestion through excess demand, such as through higher peak charges for use of bus services, electricity, railways, telephones, and road pricing to reduce traffic congestion; airlines and shipping companies may be charged higher fees for slots at airports and through canals at busy times. This pricing strategy regulates demand, making it possible to manage congestion without increasing supply.
According to the economic theory behind congestion pricing, the objective of this policy is to use the price mechanism to cover the social cost of an activity where users otherwise do not pay for the negative externalities they create (such as driving in a congested area during peak demand).
By setting a price on an over-consumed product, congestion pricing encourages the redistribution of the demand in space or in time, leading to more efficient outcomes.
COMMENTS APPRECIATED
Refer and Subscribe
***
***
Filed under: "Ask-an-Advisor", Ethics, Funding Basics, Glossary Terms, Health Economics, Healthcare Finance, Investing, LifeStyle | Tagged: congestion charges, congestion pricing, economic theory, economics, externalities, wikipedia | Leave a comment »














