Road Transport Investment Projects and Additional Economic Benefits
The paper examines the linkages between transport and the economy with particular focus on the basis for additionality of wider economic benefits from road transport infrastructure improvements. A major weakness of current appraisal practice of road transport infrastructure projects is its basis on partial equilibrium analysis. The partial equilibrium approach implies that the linkage from changes in the transport market is ignored creating the scope for a less than comprehensive consideration of all benefits and costs. The importance of ignoring other markets in transport appraisal has been subject to much analysis in the available literature: A key research question is whether such wider economic impacts are additional to the time and cost savings generated from transport policy interventions. The key condition under which wider economic effects are additional to a standard CBA is the extent to which the economy departs from the economic model of perfect competition. If imperfect competition dominates then it is possible that the wider economic effects can be additional to the CBA result. The context in which perfect competition is not a valid assumption involves imperfectly competitive output and input markets and/ or existence of subsidies and taxes. Furthermore, external costs such as air pollution or congestion from the transport sector as well as from economic activities across the different sectors can influence the CBA result. Computable General Equilibrium (CGE) models represent a possible solution to the problem of partial equilibrium analysis. The paper will review available theoretical and empirical evidence of how road transport improvements are linked to the wider economy including the possibility for addditionality. It will re-assess the role of Computable General Equilibrium models in measuring these additional benefits. Finally, it will consider the feasibility of examining the additional benefits that Britain’s motorway network has brought to the national economy.
|Date of creation:||Aug 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.ersa.org
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Aschauer, 1988.
"Is public expenditure productive?,"
88-7, Federal Reserve Bank of Chicago.
- Alan Manning, 2003.
"The real thin theory: monopsony in modern labour markets,"
LSE Research Online Documents on Economics
20050, London School of Economics and Political Science, LSE Library.
- Manning, Alan, 2003. "The real thin theory: monopsony in modern labour markets," Labour Economics, Elsevier, vol. 10(2), pages 105-131, April.
- Alan Manning, 2003. "The Real Thin Theory: Monopsony in Modern Labour Markets," CEP Discussion Papers dp0564, Centre for Economic Performance, LSE.
- T.R. Lakshmanan & P. Nijkamp & E.T. Verhoef & P. Rietveld, 2001. "articles: Benefits and costs of transport Classification, methodologies and policies," Papers in Regional Science, Springer, vol. 80(2), pages 139-164.
- Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
- Anthony J. Venables, 2004.
"Evaluating Urban Transport Improvements: Cost Benefit Analysis in the Presence of Agglomeration and Income Taxation,"
CEP Discussion Papers
dp0651, Centre for Economic Performance, LSE.
- Anthony J. Venables, 2007. "Evaluating Urban Transport Improvements: Cost-Benefit Analysis in the Presence of Agglomeration and Income Taxation," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 41(2), pages 173-188, May.
- Tony Venables, 2004. "Evaluating urban transport improvements: cost benefit analysis in the presence of agglomeration and income taxation," LSE Research Online Documents on Economics 2205, London School of Economics and Political Science, LSE Library.
- Crafts, Nick, 1996. "'Post-neoclassical Endogenous Growth Theory': What Are Its Policy Implications?," Oxford Review of Economic Policy, Oxford University Press, vol. 12(2), pages 30-47, Summer.
- Boarnet, Marlon G. & Haughwout, Andrew F., 2000. "Do Highways Matter? Evidence and Policy Implications of Highways' Influence on Metropolitan Development," University of California Transportation Center, Working Papers qt5rn9w6bz, University of California Transportation Center.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa05p522. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)
If references are entirely missing, you can add them using this form.