Showing posts with label traffic. Show all posts
Showing posts with label traffic. Show all posts

Why is a speed limit rule effective?

Sunday, August 23, 2009

I had a discussion with my Canadian friend a few days ago. I told him, that I grew skepticial about the role of law in society. I explained, that it is very difficult to establish causation (or strong correlation) between a particular law and behavioral changes intended by the law. Put it simply, it is hard to argue that a particular law has any meaning at all in practice.

After discussing for several minutes, my Canadian friend then uttered that Canada has recently changed its speed limit rule. After the speed limit rule was altered, he said everyone in Canada complied to the rule despite the fact that the effort to socialize the rule is very minimum. Nevertheless, the news spread rapidly and everyone complies.

My friend then went on to explain that in Canada, a driver's license means a person's life. Without a car, it is difficult to travel from one place to another, and in order to be able to drive a car, one will need a driver's license. So when your driver's license is revoked, you'll be paralyzed.

Ah, so now I understand that for Canadians, a driver's license is everything. No wonder they quickly complied to the new speed limit rule. But... what if Canada has a more developed network of train systems? What if people had more choices of transport other than private cars? What if Canada is not as big as it is today, but shrinked and compressed to the size of Madura Island? Would the people there complies to the speed limit rule the way they do today?

I think economics might give a little enlightment. If there is no other alternative of supply (no substitute) and the good is a necessity of life, then the demand is inelastic. In this case, the police can act as a monopolist, it can charge a very "high price" such as imposing rigorous and expensive test for acquiring a driver's license and lowering speed limits. Drivers would have no other option but to "buy" the goods, that is, to comply with it. Of course, at some point if the pricing gets too high, for example if the police lowers the speed limit unreasonably in highways, drivers will think twice using cars and compel themselves to innovate in other means of transports.

In Indonesia, the case is different. People here have a variety of options for transportation in addition to private cars. Public transport is abundant and cheap. So the demand may not really be that strong for a driver's license. I guess the implication would be that people's compliance to traffic rules will be less than in Canada.

Of course, the explanation above still does not take into account that there are 'illegal' supplies of driver's license. If the black market is strong, then the police's monopoly power will decrease because the goods is easily obtainable at cheaper prices. Hence, there will be less incentive to comply.