Externalities

Pico y Placa: Evaluation
Pico y Placa was a measurement imposed by Augusto Barrera who is the mayor of the city of Quito. The goal of this measurement is to restrict the circulation of certainvehicles depending on the last number of their license plate, for six hours a day. Vehicles with 0-1 as the last digit have their restrictions on Monday, 2-3 on Tuesday, 4-5 on Wednesday, 6-7 on Thursdayand finally 8-9 on Friday. The schedules for the circulation restrictions go from 7am to 9:30 am and later from 4pm to 7:30 pm. The Council established penalties: $ 80 fine and one day hold of thevehicle if the person disrespects the norm, if they do it a second time, $ 120 and three days of retention, and if someone disrespects the norm again he/she must pay $ 240 and the vehicle will beretained for five days. Statistics show that each year there is an increase of approximately 30,000 cars within the city of Quito. If that is not controlled in the year 2025 there will be around 1,290,000existing vehicles.
This measurement was taken because the city of Quito was suffering from tremendous traffic at all hours of the day. The problem was becoming so serious that in one third of theroads, vehicles were only able to reach a speed of 10km/h meaning that traffic was overwhelming. The high amount of traffic not only affected people’s transportation, but the environment too. CO2emissions reached 119.583 tons per year, and small cars were responsible for 46.154 of those tons. The Pico y Placa is a solution for the Negative Externality of Consumption created by the overconsumptionof vehicles. The overconsumption of vehicles affects a third party of living organisms. It affects people’s life routines because of the high amount of traffic, and their health too because of the highamount of carbon dioxide emissions. The environment is also part of the third party because pollution affects its growth and development.

The negative externality of consumption creates a...