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1.3.2 Externalities

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Question 12

Extract B

Is municipal e-cargo delivery a public good?

Municipal electric-cargo (e-cargo) bike delivery programs have expanded rapidly. In the historic city of Oakhaven, the "GreenFreight" scheme is funded through local business rates and a subsidised commercial licensing fee. This allows local retailers to use electric cargo bikes for last-mile deliveries within the zero-emission zone for a nominal charge.

Without municipal intervention, private logistics firms would underprovide these eco-friendly delivery services. They are unable to charge third-party residents for the benefits of quieter streets, lower particulate pollution, and preserved historical pavements, leading to market failure.

The scheme's charter sets out its main operational objectives:

  • To eliminate diesel particulate matter and reduce localized nitrous oxide emissions
  • To preserve fragile historic cobblestone streets from damage caused by heavy delivery vehicles
  • To provide affordable, last-mile logistics for micro-businesses and independent retailers
  • To improve safety for pedestrians and cyclists in dense, high-footfall commercial zones
  • To reduce traffic bottlenecks and idling times on the city's narrow medieval thoroughfares

With reference to Extract B, explain two external benefits associated with the consumption of municipal e-cargo bike delivery services.

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Markscheme

1.3.2 Externalities Questions

  1. A Level
  2. /Economics
  3. /1.3.2 Externalities

54 exam-style questions on Edexcel A A Level Economics 1.3.2 Externalities. Each one has a worked solution and a mark scheme showing where the marks go.

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