Three ideas suggested about cell phone regulation (assuming that cell phones and driving impose a cost through riskier driving–a contested proposition, as was noted):

1. Impose a ban/fine: This is Law & Econ 101, so I’m a bit embarrassed that I didn’t think of it myself, but as usual Jonathan Klick was able to straighten me out on my economics. A “ban” is usually enforced through a fine, so if you impose, say a $25 dollar fine if someone is busted, then people will automatically tend to sort themselves into high and low users and will minimize the length of their calls to reduce the probability of being hit with a fine. The problem to my mind, is that local governments seem to use traffic regulations to raise revenue rather than to establish optimal rules, so who is to say they will set the rate at the proper price.

2. TAx on moving converstaions: Doug Lichtman had an interesting idea of taxing cell phone conversations differently depending on whether the conversation moves from one cell tower to another or remains on the same cell tower throughout. This is over-inclusive because it catches passengers too, but its a nifty idea because it tries to directly regulate the cost side of the transaction and tax at a higher rate those phone calls that have the greatest propensity to impose costs through risky driving (talking in a moving vehicle) versus low-cost calls that are stationary.

3. Technology and market adjustments: Mike Vos suggested that if there is a real cost here that the market would probably sort it out. He suggested that if cell phone drivers get in more accidents, this would create an incentive to tie cell phones into the “black box” recorders that are now in cars or GPS systems, such that it would be possible to determine if a person was traveling while talking on the phone. This has the added benefit, of course, of providing sound incentives to figure out whether cell phones actually impair driving by relying on adjustments in the insurance market to make that determination.

Thanks to everyone who wrote in with these ideas and others, all of which were very clever.

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