A policy maker argues that congestion on the roads can be solved by private ownership of the roads. He argues that if the roads were privately owned, then the externality of congestion would be fully internalized and solved by the market. Discuss this by first explaining the externality problem that leads to congestion, and then explain whether the private market would deliver the efficient level of roads. The externality is caused by drivers considering the private - benefit of using the road, but not the social cost. More and more drivers pull onto the road, not recognizing the cost other drivers experience as a result. Private roads, or publicly operated toll roads, can reduce congestion because now the right to use the road is excludable. On the other hand, turning the public good into a club good poses other problems. Now the external costs will not be fully considered. When there is a negative - externality, private markets will underproduce the good.