Traffic Congestion Is a Common Example of a Negative Externality

Multiple Choice

Traffic congestion is a common example of a negative externality. In principle, it should be possible for drivers to negotiate the right to drive at particular times, thereby compensating those who would prefer not to drive at peak times and solving the externality. The most likely reason these negotiations do NOT occur is that:

A) individuals are unfamiliar with the Coase theorem.
B) the bargaining costs of such negotiations would be prohibitive, as there are (in large cities) many interested parties.
C) such an agreement could not be enforced, since all individuals have free access to all public roads.
D) the punitive nature of the negotiations for those not involved would ensure it cannot come to pass.