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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.









