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Traffic safety: speed limits, strict liability and a km tax

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  • Eef Delhaye

    ()
    (K.U.Leuven-Center for Economic Studies)

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    Abstract

    Policy makers can improve traffic safety by the use of different instruments. These instruments include regulation (e.g. speed limits, vehicle standards, etc.), enforcement of regulation, liability rules, physical measures (e.g. roundabouts, speed humps, etc.), economic instruments (pricing of transport, insurance pricing), education and sensitisation. In this paper we focus on two specific determinants of accidents: speed and the number of kilometres people drive. If there is no government intervention, people do not take into account the full cost of their driving and they will drive too fast and too much. In our setting, the government can use three instruments to influence the behaviour of people: speed limits, strict liability and a kilometre tax. We set up a theoretical model of traffic accidents to analyse the choice of the speed level and the number of kilometres under the different instruments and determine the optimal combinations. Given our assumptions we never reach the social optimum. To illustrate our results we discuss a numerical example.

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    Bibliographic Info

    Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0407.

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    Length: 44 pages
    Date of creation: Aug 2004
    Date of revision:
    Handle: RePEc:ete:etewps:ete0407

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    Keywords: transport; law and economic; liability; regulation; accidents;

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    References

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    1. Schmitz, Patrick W., 2000. "On the Joint Use of Liability and Safety Regulation," MPRA Paper 12536, University Library of Munich, Germany.
    2. Burrows, Paul, 1999. "Combining regulation and legal liability for the control of external costs," International Review of Law and Economics, Elsevier, vol. 19(2), pages 227-244, June.
    3. Steven Shavell, 1989. "Specific Versus General Enforcement of Law," NBER Working Papers 3062, National Bureau of Economic Research, Inc.
    4. John Peirson & Ian Skinner & Roger Vickerman, 1996. "The Microeconomic Analysis of the External Costs of Road Accidents," Studies in Economics 9606, Department of Economics, University of Kent.
    5. Steven Shavell, 1983. "Liability for Harm Versus Regulation of Safety," NBER Working Papers 1218, National Bureau of Economic Research, Inc.
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