Hamilton Project Discussion Paper

America's Traffic Congestion Problem: Toward a Framework for National Reform

ABSTRACT

A large and growing burden on the nation’s economy, traffic congestion arises for various reasons, and more than one mechanism is needed to combat it. It is most unlikely, however, that serious inroads to address the problem will be made without fundamental reform in the way consumers are charged for their use of congested highways. Congestion prices are tolls that reflect the economic costs of congestion, including productivity losses from traffic delays, increased accidents, higher emissions, and more. Congestion prices would help reduce these economic costs and guide transportation investment resources to their highest and best use—which would include a better balance between highway and transit investment. In addition, such prices would generate revenues to help finance new investment and compensate low-income people and others for whom toll payments are especially burdensome. Requiring federal, state, and local engagement, such reform is a necessary step in the development of an effective, efficient, and sustainable highway system for the twenty-first century.

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