OCR A2 Economics Congestion

Congestion

'Congestion refers to a situation whereby journey times are longer than expected'

It occurs when another car enters a road and holds up/slows down all other cars

This imposes an external cost on other motorists

External costs of congestion:

• Time (work time and lesuire time) Oppurtunity cost
• Depreciation
• Fuel wasted
• 
  

Why Road Congestion is a Market Failure: 

• Free market equilibirum is where MPC=MSB
• Here there are too many cars using the road
• The car owners ignore the negative externality
• Over consumption
• Optiumum is where MSC = MSB
• Past Q optimum social costs exceed social benefit
• Allocative inefficiency
• The cost/price of the road is too low

Economists have calculated that the cost of congestion on UK roads is £25billion per year. How would they arrive at this figure? 

• Congestion occurs when a driver's journey time is beyond their expectations
• It is caused by too many vehicles on the road
• Economists…