Question

Describe how congestion charges should be structured to offset congestion externalities.

Answer 1

In economics we analyse various economic charges,in which a system of surcharging users of public goods that are subject to congestion through more demand.For example, Use of public utility services like government schools or health sector reduces the congestion of private school and health sectors.Meanwhile if we are using public transportation system it reduces road traffic congestion.So when we look into externalities of congestion it has positive externalities because government sector and its activities are allowed for sustainable development.It saves the amount to the government and income of the government will increase with the help of usage of public sector.When government impose any tax it should see that it should not be burden to anyone rather it should fetch them positive output like positive externalitites.So when positive externalities are increased government will have various avenues for development and it is mainly possible with the help of congestio charges.