IndexEconomic model and explanationCongestion taxBuilding more roadsConclusionThe purpose of this report is to show the effects of what will happen on the supply and demand curves when three different types of roads are introduced policies, the three types of policies in the report that will be discussed are; tax or congestion charge, improving substitutes and building more roads to use. Currently, Brisbane City Council is committed to reducing congestion along the city's road network by taking several approaches to reduce the overall effect of road congestion, the way they are reducing road congestion is by investing in cycle lanes, sharing the improvement of routes, investing in public transport and encouraging other ways of travel. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Travel time to different places in Australia has increased significantly, an article produced by Phil Manners states that travel time between destinations in peak hour and off-peak traffic is three times longer long (Manners). Even a small reduction in congestion can have a huge impact on traffic speed, a 5% decrease in traffic congestion could lead to speed increases of up to 50% (Martin & Thornton). The graph below shows the annual number of annual journeys: Since 1945 the number of people traveling by car has increased almost tenfold (Cosgrove, Traffic and Congestion Cost Trends for Australian Capital Cities). Just imagine the amount of pollution, tire rubber, amount of time wasted in rush hour traffic, and fuel consumption based on the number of people using motorized passenger travel. The Total Avoidable Social Costs graph shows the amount of avoidable social costs each year. The Australian Government has estimated the avoidable cost of congestion at approximately $16.5 billion, rising to $30 billion by 2030. Economic Model and Explanation The economic model shown in Figure 1 shows the effect that a negative externality in production will have on a supply and demand model, when the market is at its maximum efficiency it will be efficient in Q1 and efficient in P1, when the negative externality effect is taken into account the supply curve will shift to the left, the quantity will move downward to market Q2 as the price rises from the efficient P1 market to P2 market. The goal of this model is to reduce the amount of deadweight loss which is shown by the crossed line between the private marginal cost and the social marginal costs. Congestion tax The model in figure 2 shows the effect of introducing a congestion tax, from figure 2 it will move left from the efficient price and quantity labeled by market Q1 and market P1 towards the efficient price Q2 and the efficiency P2. The difference between the two supply curves will be the amount of tax that will be charged. When a congestion charge is introduced, it has its benefits, such as reducing the number of cars on the road leading to reductions in CO2 and other greenhouse gas emissions, increased road safety and new government revenue and travel times shorter, but also has disadvantages such as decreased fuel revenue (GST) and operational costs to support the new system. There was a trial in Stockholm which took place between 3 January and 31 July 2006, it consisted of charging a tax when driving in Stockholm, depending on the time of day you entered, it varied the price from.