This article argues that the best response to the tragedy of road congestion has to rely on market-based regulatory techniques and public policies aimed at controlling the demand-side of transportation congestion. Among market-based regulatory techniques, economists seem to favor price-based instruments over quantity-based instruments. This article argues instead that quantity instruments, such as tradable permits of road usage and real estate development, can better internalize all the externalities that road congestion produces. This article also advances the idea that quantity instruments are more successful tools in addressing urban congestion for four reasons: (1) they respond better to equity concerns; (2) they are therefore more politically viable; (3) they are more likely to be well designated; and (4) they are able to represent a catch-all strategy for externalities produced by congestion.

Part II of this article illustrates that the costs that congestion imposes on society or, to use the preferred language of economists, the negative externalities that road congestion produces. Part III sheds light on the underlying causes of urban congestion. Part IV enumerates regulatory tools that are available to address the negative externalities of urban congestion and proposes a comparative analysis of the different strategies that have been implemented to address this problem throughout the world. Part V outlines possible policy options that should complement the regulatory framework. Finally, the last section concludes by stressing the need for further differentiation and experimentation in order to shape a new understanding in the use and management of the “commons” and advocates for a bottom-up regulatory strategy to address climate change and global warming, a strategy centered upon the regulation of individual behavior at the urban level.

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