Road Pricing in NYC
A plan to reduce traffic by charging motorists who drive into the heart of Manhattan may get another look after Mayor Michael Bloomberg reversed himself yesterday and endorsed the idea....Congestion pricing is popular among economists. What we need is for all cars to be equipped with fast-pass readers to reduce the costs of collection.
"Using economics to influence public behaviour is something this country is built on -- it's called capitalism," Bloomberg said.
Update: In the comments section, there is some debate about whether road pricing is really a Pigovian tax or just a user fee for consuming a scarce resource. In my view, both are perfectly valid ways of viewing the situation. When people are not charged (or are undercharged) for using a common resource such as a congested road, then incremental use of the resource entails a negative externality on other users. Imposing a user fee for the scarce resource can be described as a Pigovian tax to deal with this externality. Similarly, a conventional Pigovian tax such as a tax on pollution emissions can be described as a user fee for consuming clean air. The distinction between user fee and Pigovian tax in these cases is purely semantic.