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Does Supporting Passenger Railways Reduce Road Traffic Externalities?

  • Rafael Lalive
  • Simon Luechinger
  • Armin Schmutzler

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 Department of Economics - University of Zurich in its series ECON - Working Papers with number 110.

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Date of creation: Feb 2013
Date of revision:
Handle: RePEc:zur:econwp:110
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  1. Gilles Duranton & Matthew A. Turner, 2009. "The Fundamental Law of Road Congestion: Evidence from US cities," Working Papers tecipa-370, University of Toronto, Department of Economics.
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  9. Rafael Lalive & Armin Schmutzler, 2011. "Auctions vs negotiations in public procurement: which works better?," ECON - Working Papers 023, Department of Economics - University of Zurich.
  10. Kenneth Y. Chay & Michael Greenstone, 2003. "The Impact of Air Pollution on Infant Mortality: Evidence from Geographic Variation in Pollution Shocks Induced by a Recession," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 1121-1167.
  11. Lalive Rafael & Schmutzler Armin, 2008. "Entry in Liberalized Railway Markets: The German Experience," Review of Network Economics, De Gruyter, vol. 7(1), pages 1-16, March.
  12. Janet Currie & W. Reed Walker, 2009. "Traffic Congestion and Infant Health: Evidence from E-ZPass," NBER Working Papers 15413, National Bureau of Economic Research, Inc.
  13. Janet Currie & Matthew J. Neidell & Johannes Schmieder, 2008. "Air Pollution and Infant Health: Lessons from New Jersey," NBER Working Papers 14196, National Bureau of Economic Research, Inc.
  14. Armin Schmutzler, 2011. "Local Transportation Policy and the Environment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(3), pages 511-535, March.
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  16. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
  17. Janet Currie & Matthew Neidell, 2005. "Air Pollution and Infant Health: What Can We Learn from California's Recent Experience?," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 1003-1030.
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