Graduation Year

Fall 2010

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Thomas Borcherding

Rights Information

© 2010 Sam Corcos

Abstract

Los Angeles has had the worst traffic for the longest time out of any American city with many of its residents commuting for over an hour to and from work. The solution to this problem has existed for over 50 years but political forces have stopped its implementation. With the funding problems California—and the nation—faces, it is hard to convince politicians to build new roads, especially when they won’t see results for almost 20 years, long after they have left office. This funding gap is where the private sector can play a role. Using “congestion pricing,” a concept introduced in 1952 by Nobel Prize-winning economist William Vickrey, a private company can recoup its costs from road construction and turn a profit; a procedure that encourages further road construction by moving transportation decisions from bureaucrats to entrepreneurs. As we shall see, these two groups have vastly different incentives that lead to very different policies.

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