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An econometric analysis of motorway renewal costs in Germany


  • Link, Heike


The analysis of motorway renewal costs presented in this paper was driven by two research questions: First, to analyse the economic process of motorway renewal work and to identify whether there exist economies of scale; and second to identify the influence of traffic volume on renewal costs and to derive an estimate of marginal infrastructure costs as part of optimal road user charges. The analysis is based on cross-sectional data for motorway renewal costs and traffic volume in Germany during the period 1980-1999. Two translog models were estimated, each of them including the factor input prices for labour, material and capital, and a set of regional dummy variables as well as dummy variables for the type of material used for renewal. The first model includes in addition to these variables the sqm of renewed road as explanatory variable. The second model was constructed to analyse the relationship between traffic volume and renewal costs and contains the average annual daily traffic volume of trucks and passenger cars as independent variables. Two main results were derived from the models: First, motorway renewal work is characterised by substantial economies of scale. Second, the relationship between renewal costs and traffic volume is expressed by a cost elasticity, i.e., the ratio between marginal and average costs, which ranges from 0.05 up to 1.17 with a digressive increase of marginal costs.

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  • Link, Heike, 2006. "An econometric analysis of motorway renewal costs in Germany," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 19-34, January.
  • Handle: RePEc:eee:transa:v:40:y:2006:i:1:p:19-34

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    Cited by:

    1. Link, Heike & Götze, Wolfgang & Himanen, Veli, 2009. "Estimating the marginal costs of airport operation using multivariate time series models with correlated error terms," Journal of Air Transport Management, Elsevier, vol. 15(1), pages 41-46.
    2. Luigi Benfratello & Alberto Iozzi & Paola Valbonesi, 2009. "Technology and incentive regulation in the Italian motorways industry," Journal of Regulatory Economics, Springer, vol. 35(2), pages 201-221, April.
    3. Paul J.J. Welfens, 2006. "Grundlagen rationaler Transportpolitik bei Integration," EIIW Discussion paper disbei144, Universitätsbibliothek Wuppertal, University Library.
    4. Andersson, Mats, 2011. "Marginal cost of railway infrastructure wear and tear for freight and passenger trains in Sweden," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 48, pages 3-23.
    5. Heike Link & Wolfgang Götze & Veli Himanen, 2006. "Estimating the marginal costs of airport operation by using multivariate time series model with correlated error terms," Working Papers 11, Institute of Transport Economics, University of Muenster.
    6. Meunier, David & Quinet, Emile, 2010. "Tips and Pitfalls in PPP design," Research in Transportation Economics, Elsevier, vol. 30(1), pages 126-138.
    7. Link, Heike & Nilsson, Jan-Eric, 2005. "Infrastructure," Research in Transportation Economics, Elsevier, vol. 14(1), pages 49-83, January.
    8. Ozbay, Kaan & Bartin, Bekir & Yanmaz-Tuzel, Ozlem & Berechman, Joseph, 2007. "Alternative methods for estimating full marginal costs of highway transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(8), pages 768-786, October.
    9. Yossi Berechman & Bekir Bartin & Ozlem Yanmaz-Tuzel & Kaan Ozbay, 2011. "The Full Marginal Costs of Highway Travel: Methods and Empirical Estimation for North America," Chapters,in: A Handbook of Transport Economics, chapter 19 Edward Elgar Publishing.
    10. Chris Nash & Jeremy Shires & Heike Link, 2010. "Quantifizierung der sozialen Grenzkosten des Straßenverkehrs: welches sind die wichtigsten Komponenten?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 79(2), pages 13-38.
    11. repec:eee:trapol:v:59:y:2017:i:c:p:46-53 is not listed on IDEAS

    More about this item

    JEL classification:

    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models


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