This paper discusses the nature, and magnitude, of externalities associated with
automobile use, including local and global pollution, oil dependence, traffic congestion
and traffic accidents. It then discusses current federal policies affecting these
externalities, including fuel taxes, fuel economy and emissions standards, and alternative
fuel policies, summarizing, insofar as possible, the welfare effects of those policies.
Finally, we discuss emerging pricing policies, including congestion tolls, and
insurance reform, and summarize the appropriate combination of policies to address
Parry, Ian, W. H. , Margaret Walls, and Winston Harrington.
2007."Automobile Externalities and Policies."Journal of Economic Literature,
45(2): 373-399.DOI: 10.1257/jel.45.2.373