Governments have at their disposal two main types of instruments to contain the external effects of transport: standards, and taxes. While taxes are to be preferred from an efficiency viewpoint, it is nevertheless striking that standards are used more frequently. This also holds true for policies with respect to travel speeds: as far as speed is concerned, standards (speed limits) are in use almost universally in road transport. This note will address a number of issues concerning speed limits in road transport; in particular it will discuss their potential to solve the problems related to the gap between private and social costs of transport. (A)
Abstract