Singapore Electronic Road Pricing

Singapore implemented an electronic road pricing (ERP) scheme to address traffic congestion caused by too many cars on the roads. The ERP scheme uses electronic toll collection to charge drivers a usage-based tax during peak periods, reducing congestion by internalizing the negative externality of traffic and noise. By implementing the ERP, average road speeds increased by 20% and traffic went down by 13%. The ERP scheme has been an effective solution, generating $0.1 billion per year for the government.