Economic implications of phantom traffic jams: evidence from traffic experiments

ABSTRACT Traffic jams occur even without bottlenecks, simply because of interaction of vehicles on the road. From a driver’s point of view, the instability of the traffic flow arises stochastically. Because the probability of a traffic jam increases with the number of cars on the road, there is a traffic flow breakdown externality. This paper offers a method to calculate this externality for traffic on a circuit. Ignoring the stochastic nature of traffic flow breakdowns results in congestion charges that are too small.

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