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Cost-benefit analysis of transport improvements in the presence of spillovers, matching and an income tax

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  • Eliasson, Jonas
  • Fosgerau, Mogens

Abstract

This paper addresses the problem of measuring the welfare benefits of a transport improvement. We formulate and analyze a rich spatial model that allows for spillovers, matching and income tax, in a setting with multiple work and residential locations and very general worker heterogeneity. The conventional consumer surplus captures part of the benefits and is calculated based on predictions of changes in travel demand and transport costs. The issue is to determine which so-called wider impacts to add to this. We find that adding the change in total output as a wider impact leads to double-counting of benefits. The output change due to spillovers should be added, while the output change due to matching is already partly included in the consumer surplus. These results are useful for applied cost-benefit analysis of transport policies.

Suggested Citation

  • Eliasson, Jonas & Fosgerau, Mogens, 2019. "Cost-benefit analysis of transport improvements in the presence of spillovers, matching and an income tax," Economics of Transportation, Elsevier, vol. 18(C), pages 1-9.
    • Handle: RePEc:eee:ecotra:v:18:y:2019:i:c:p:1-9
    DOI: 10.1016/j.ecotra.2019.02.001
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    Cited by:

    1. Eliasson, Jonas & Savemark, Christian & Franklin, Joel, 2020. "The impact of land use effects in infrastructure appraisal," Transportation Research Part A: Policy and Practice, Elsevier, vol. 141(C), pages 262-276.
    2. Graham, Daniel J. & Gibbons, Stephen, 2019. "Quantifying Wider Economic Impacts of agglomeration for transport appraisal: Existing evidence and future directions," Economics of Transportation, Elsevier, vol. 19(C), pages 1-1.
    3. Asplund, Disa & Pyddoke, Roger, 2020. "Optimal fares and frequencies for bus services in a small city," Research in Transportation Economics, Elsevier, vol. 80(C).
    4. Gómez-Lobo, Andrés & Micco, Alejandro, 2023. "Urban commuting time and sick-leave medical license use: An empirical study of Santiago, Chile," Economics of Transportation, Elsevier, vol. 33(C).
    5. Holmgren, Johan, 2020. "The effect of public transport quality on car ownership – A source of wider benefits?," Research in Transportation Economics, Elsevier, vol. 83(C).
    6. Seyed Mahdi Miraftabzadeh & Babak Ranjgar & Alessandro Niccolai & Michela Longo, 2024. "Comparative Analysis of Sustainable Electrification in Mediterranean Public Transportation," Sustainability, MDPI, vol. 16(7), pages 1-24, March.
    7. Lång, Elisabeth & Börjesson, Maria, 2025. "Gender differences in commuting distance: A temporal analysis of changes and (Un)explained gaps," Research in Transportation Economics, Elsevier, vol. 112(C).
    8. Yixi Xue & Yi Zhang & Yi Chen, 2019. "An Evaluation Framework for the Planning of Electric Car-Sharing Systems: A Combination Model of AHP-CBA-VD," Sustainability, MDPI, vol. 11(20), pages 1-22, October.
    9. Mustafa Hamurcu & Tamer Eren, 2020. "Strategic Planning Based on Sustainability for Urban Transportation: An Application to Decision-Making," Sustainability, MDPI, vol. 12(9), pages 1-24, April.
    10. Andersson, Henrik & Hultkrantz, Lars & Lindberg, Gunnar & Nilsson, Jan-Eric, 2017. "The role of economic analysis for investment priorities in Sweden’s transport sector," Working papers in Transport Economics 2017:12, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 23 May 2018.
    11. Börjesson, Maria & Isacsson, Gunnar & Andersson, Matts & Anderstig, Christer, 2018. "Agglomeration, productivity and the role of transport system improvements," Working papers in Transport Economics 2018:16, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    12. Knudsen, Elias Stapput & Hjorth, Katrine & Pilegaard, Ninette, 2022. "Wages and accessibility – Evidence from Denmark," Transportation Research Part A: Policy and Practice, Elsevier, vol. 158(C), pages 44-61.
    13. Riukula, Krista & Väänänen, Touko, 2025. "Who Gains from Agglomeration? The Wage, Productivity, and Cost Effects of Transport Improvements on Firms and Workers," IZA Discussion Papers 18103, IZA Network @ LISER.
    14. Xuto, Praj & Bansal, Prateek & Anderson, Richard J. & Graham, Daniel J. & Hörcher, Daniel & Barron, Alexander, 2023. "Examining the impacts of capital investment in London’s Underground: A long-term analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 175(C).
    15. Riukula, Krista & Väänänen, Touko, 2024. "Estimating the Labour Market Impacts of Transport Projects in Finland," ETLA Working Papers 120, The Research Institute of the Finnish Economy.
    16. Berry, Carl & Börjesson, Maria, 2024. "Income and fuel price elasticities of car use on micro panel data," Energy Economics, Elsevier, vol. 135(C).
    17. Tscharaktschiew, Stefan, 2020. "Why are highway speed limits really justified? An equilibrium speed choice analysis," Transportation Research Part B: Methodological, Elsevier, vol. 138(C), pages 317-351.

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    Keywords

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    JEL classification:

    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • D6 - Microeconomics - - Welfare Economics
    • H4 - Public Economics - - Publicly Provided Goods

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