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Does Supporting Passenger Railways Reduce Road Traffic Externalities?

  • Lalive, Rafael
  • Luechinger, Simon
  • Schmutzler, Armin

Many governments subsidize regional rail service as an alternative to road traffic. This paper assesses whether increases in service frequency reduce road traffic externalities. We exploit differences in service frequency growth by procurement mode following a railway reform in Germany to address endogeneity of service growth. Increases in service frequency reduce the number of severe road traffic accidents, carbon monoxide, nitrogen monoxide, nitrogen dioxide pollution and infant mortality. Placebo regressions with sulfur dioxide and ozone yield no effect. Service frequency growth between 1994 and 2004 improves environmental quality by an amount that is worth approximately 28-40 % of total subsidies. An analysis of household behavior shows that the effects of railway services on outcome variables are driven by substitution from road to rail.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9335.

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Date of creation: Feb 2013
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Handle: RePEc:cpr:ceprdp:9335
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  1. Rafael Lalive & Armin Schmutzler, 2006. "Entry in liberalized railway markets: The German experience," SOI - Working Papers 0609, Socioeconomic Institute - University of Zurich, revised Apr 2007.
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  12. Currie, Janet & Neidell, Matthew & Schmieder, Johannes F., 2009. "Air pollution and infant health: Lessons from New Jersey," Journal of Health Economics, Elsevier, vol. 28(3), pages 688-703, May.
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  17. Simon Luechinger, 2009. "Valuing Air Quality Using the Life Satisfaction Approach," Economic Journal, Royal Economic Society, vol. 119(536), pages 482-515, 03.
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