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Benefit estimation of transport projects--a representative consumer approach

Listed author(s):
  • Kidokoro, Yukihiro

In this paper, by focusing on the forms of the utility function of a representative consumer, we explain the three typical models of benefit estimation for transport projects: the basic model, the Wardrop model, and the logit model. The basic model is a representative consumer model with a quasi-linear utility function that is additively separable between numeraire and transport services. The paper clarifies the relationship between these models and derives their implications for benefit estimation. We find that the Wardrop and logit models are special cases of the basic model and that the logit model degenerates to the Wardrop model in a limiting case. Although this relationship implies that one can apply the benefit estimation method for the basic model whatever method is used to estimate transport demand, the Wardrop and logit models have useful features for conducting benefit estimation for new routes.

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Article provided by Elsevier in its journal Transportation Research Part B: Methodological.

Volume (Year): 40 (2006)
Issue (Month): 7 (August)
Pages: 521-542

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Handle: RePEc:eee:transb:v:40:y:2006:i:7:p:521-542
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  1. Williams, H. C. W. L. & Lam, W. M., 1991. "Transport policy appraisal with equilibrium models I: Generated traffic and highway investment benefits," Transportation Research Part B: Methodological, Elsevier, vol. 25(5), pages 253-279, October.
  2. Jara-Díaz, Sergio R. & Friesz, Terry L., 1982. "Measuring the benefits derived from a transportation investment," Transportation Research Part B: Methodological, Elsevier, vol. 16(1), pages 57-77, February.
  3. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, March.
  4. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-130, January.
  5. Richard Arnott & An Yan, 2000. "The Two-Mode Problem: Second-Best Pricing and Capacity," Boston College Working Papers in Economics 474, Boston College Department of Economics.
  6. Choi, Ki-Hong & Moon, Choon-Geol, 1997. "Generalized extreme value model and additively separable generator function," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 129-140.
  7. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-597, September.
  8. Verboven, Frank, 1996. "The nested logit model and representative consumer theory," Economics Letters, Elsevier, vol. 50(1), pages 57-63, January.
  9. H. C. W. L. Williams & D. Van Vliet & C. Parathira & K. S. Kim, 2001. "Highway Investment Benefits under Alternative Pricing Regimes," Journal of Transport Economics and Policy, University of Bath, vol. 35(2), pages 257-284, May.
  10. Williams, H. C. W. L. & Lam, W. M. & Austin, J. & Kim, K. S., 1991. "Transport policy appraisal with equilibrium models III: Investment benefits in multi-modal systems," Transportation Research Part B: Methodological, Elsevier, vol. 25(5), pages 293-316, October.
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