We use applied microeconomics to examine several salient problems of urban transportation: traffic congestion, air pollution, the costs of motor vehicle accidents and the future of public transportation. Throughout this chapter, we focus on analytic methods and findings that bear on current policy issues, and on the factual basis for policy analysis. We find that the most promising approaches in each case are narrowly targeted to solving market failures, such as the existence of externalities, and that these approaches are unlikely to alter the overall dominance of automobiles in urban passenger transportation.
