As of March 1st, 2020, all public transport in Luxembourg is now free. Yes, you read it right. All free! This is the latest measure taken by the government of the tiny European nation in their war against traffic.
Despite only having a population of 602,000 people, Luxembourg suffers from a major traffic problem. According to the TomTom global traffic index the average driver lost 163 hours sitting in rush hour traffic jams last year. That is almost 7 days!
The government is hoping that free public transport across the country will help alleviate the heavy congestion, as well as bringing many environmental benefits. It is expected that free transport will be a suitable incentive for many people to leave their cars at home and utilise the country’s bus, train, and tram network.
Whilst this might sound like an expensive plan, the Luxembourg economy is one of the strongest in Europe. The government has recorded a strong fiscal budget for the last 9 years and GDP per capita is consistently amongst the highest in the world.
The only question now is whether the people of Luxembourg, with their high salaries and nice cars, are actually going to be motivated enough to take public transport instead!
THINK LIKE AN ECONOMIST!
Q1. What is meant by the term public good?
Q2. Explain why making all public transport free could also bring environmental benefits.
Q3. Analyse the impact that this policy is likely to have on reducing traffic congestion and environmental damage in Luxembourg.
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