![]() When deciding whether to get on the freeway during rush hour, did you ever stop to consider that if you did so, you would slow everybody ELSE down? When we ask our students that question, they typically laugh-their only consideration is how long their own trip will take. In the game, traffic congestion is simulated to demonstrate the effect of a negative externality. ![]() ![]() Understanding this concept is important because when externalities are present, the outcome of free markets may lead to situations that are socially undesirable (e.g., too much pollution or not enough private investment in education and research). The Freeway Game was created to help students come to grips with the concept of 'externality'.
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