The news headlines are dominated by the seemingly "impossible" problem of how to let Aucklanders go on their summer holidays, without spreading the virus throughout the country. The government, courtesy of COVID Minister, Chris (aka"Chippy") Hipkins, has suggested another Soviet-style "rationing" scheme, along MIQ lines, whereby folks would have to book, that was so absurd even the Deputy PM immediately distanced himself from it. The idea was touted as a way to avoid horrendous traffic queues with police checkpoints overwhelmed by zillions of cars.
The essence of the problem is that someone who has the virus could infect someone else, often referred to as a "negative externality" in economics. So how can one solve it? Here's a possible way. To let the summer holidays happen safely, one has to price the externality, much as many governments price another externality, namely congestion in cities, using "congestion charges". These are an example of what economists call a Pigouvian Tax.
It could work like this: Aucklanders already pay a toll online to use the Warkworth tunnel - so in the present case they could simply upload similar information before travelling, namely their car registration, and in addition, proofs of vaccination of car occupants. The system would be enforced by setting up Warkworth-tunnel style cameras on the limited number of roads out of Auckland. Those "cameras capture an image of the vehicle’s registration plate number ... The system automatically checks to see if your vehicle is linked to an account".
Anyone trying to cheat, thereby exposing others to the negative externality (i.e., the virus) would be subject to charges, which are up to the government to determine. A strong police presence on roads out of Auckland would do random checks, making sure car occupants matched uploaded details. Such schemes always lead to cheating, but police checks & penalties could make it risky.
This "solution" would make traffic queues no different from other summer holidays. There would be freedom of travel and no rationing. Only penalties imposed on those intent on exposing others to harm by possibly infecting them with the virus. Which is what any free market economist would argue there should be. Have I missed something?
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