Permits Required to Drive Along Waterfall Corridor of Columbia River Highway This Spring

EconEye Admin

4 years ago

New this year, drivers on Historic Columbia River Highway must buy a $2-per-car permit to access the “waterfall corridor.” The goal is to reduce congestion, improve safety, and make for a better viewing experience.—opb.org

Answer the following questions to check your understanding of the story.

Prior to the implementation of the $2-per-car permit, is the “waterfall corridor” rival or nonrival, excludable or nonexcludable?

The “waterfall corridor” is ______________.

a) nonrival and nonexcludable

b) nonrival and excludable

c) rival and excludable

d) rival and nonexcludable

Wrong! - As the number of cars increases, does the viewing experience change? Is the “waterfall corridor” rival or nonrival? Prior to the implementation of the $2-per-car permit, is anyone excluded from driving along the “waterfall corridor”? Is the “waterfall corridor” excludable or nonexcludable?

That's Right! - The “waterfall corridor” is rival because as the number of cars increases, the viewing experience diminishes. The “waterfall corridor” is nonexcludable because no one is prevented from benefiting from it.

Will the $2-per-car permit decrease congestion?

The $2-per-car permit ______________ decrease congestion because ______________.

a) will not; $2-per-car is too small a cost to change driver behavior

b) will not; the permit does not change the benefit the drivers receive

c) will; drivers receive a smaller benefit, so they visit “waterfall corridor” less frequently

d) will; drivers now face the external cost they impose on other drivers

Wrong! - How do drivers decide if they will take a trip along the “waterfall corridor”? Does payment of the permit change this decision?

That's Right! - Before the $2-per-car permit, drivers set marginal private cost equal to marginal benefit. With the permit, drivers set marginal private cost plus the permit price equal to marginal benefit and congestion decreases.

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