on a summer Saturday morning? What happens on Highway 401 outside
Toronto at rush hour? The answer is congestion. When congestion occurs
on roads and bridges, or in art galleries and museums, it is no longer true
that the marginal cost of providing a club good to one more user is zero.
By increasing the amount of congestion, providing the good to one more
person imposes costs on those already using the good. If I enter an
already-busy highway, I slow down all the existing traffic. If you visit an
already-crowded museum, you make it less pleasant for everybody else.
In these cases, a good that is non-rivalrous when uncongested becomes
rivalrous when congested. At this point it becomes (in economic terms) a
private good, and a positive price is efficient.
Governments that provide such goods often charge a price to help ration
the good when rivalry becomes significant. An excellent example of this
occurs in several U.S. states where special toll highways, with the aid of
powerful cameras and computers, charge motorists a different amount per
kilometre driven depending on the congestion of the highway. As the
traffic slows down because of congestion, the price per kilometre
increases to reflect the higher marginal cost. This higher price is indicated
on electronic highway signs posted regularly along the highway. Drivers
can then choose either to remain on the highway and pay the higher
price, or exit the highway and take another (less expensive) route to their
destination.
Public Goods