Abstract:

By Aug. 2003, there were more than 2 million motor cars, including 1.3 million owned by privates. As population expand incomes increase, and car prices go down, more cars will be seen in streets of Beijing. Beijing's traffic congestion causes many social and natural problems, such as air pollution and deaths in traffic. We recommend using the externality theory of environmental economics to understand the externalities of car transportation. The crux of Beijing's traffic congestion is the market failure caused by its externalities. Because of the group characteristic of the car transportation, the handling of its externalities should be relied on government solutions. By looking into other cities'traffic measures, such as London of UK, Singapore and Nagoya of Japan, we recommend using the combination of force control and economic incentive to reinforce the management of Beijing's traffic, so as to control the total amount of cars, to limit too many cars to go into the center of the city in rush hours and to encourage the citizens to use the mass transportations. Limited certificate of car ownership, congestion charging, and encourgement system for using mass traffic tools might be considered to apply in Beijing.

Key words: externality, government solutions, market failure, traffic