An article in the Economist noted that Uber, the ride-hailing app, “is said to worsen traffic problems” and observed that the result is a negative externality.
a. Explain the reasoning behind the argument that using Uber might generate a negative externality.
b. If Uber generates a negative externality, should the government impose a tax on each ride? Should the government also tax rides in taxis? Should it tax rides in private cars? Briefly explain.