Traffic safety: speed limits, strict liability and a km tax
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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- Peirson, John & Skinner, Ian & Vickerman, Roger, 1998.
"The Microeconomic Analysis of the External Costs of Road Accidents,"
London School of Economics and Political Science, vol. 65(259), pages 429-440, August.
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12536, University Library of Munich, Germany.
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- Steven Shavell, 1983. "Liability for Harm Versus Regulation of Safety," NBER Working Papers 1218, National Bureau of Economic Research, Inc.
- 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.
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