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Massachusetts Tolls and Externalities

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It has been proposed that toll collection on the Massachusetts Turnpike, a key commuter route into Boston from the west, be discontinued. Proponents argue that tolls have long ago paid for the cost of building the road; now they just provide cash for tax bureaucracy. A number of economists are opposing the repeal of tolls on the grounds that they serve to internalize externalities. Explain this argument and discuss why the government often gets involved when finding solutions for externalities.

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Solution Summary

Tolls and externalities in Massachusetts are examined.

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To internalize an externality is to weight external costs (costs that you don't suffer) as if they were your own costs. Economists who are opposing the repeal of tolls are ...

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