A Modelling Approach
Transport Economics, Management and Policy series
Edited by Bruno De Borger and Stef Proost
Chapter 5: Methodology and structure of the interregional model
Bruno De Borger 5.1 INTRODUCTION The purpose of the interregional version of the model is to analyse optimal pricing and regulatory policies for interregional transport. Although the overall structure of the model is quite similar to that of the urban version described in Chapter 4, there are a number of important diﬀerences. Some are induced by the speciﬁc characteristics of interurban transport (for example, the more detailed treatment of freight transport in an interurban environment, taking account of the eﬀects of freight transport prices on production costs and consumer prices, the relatively minor role of parking costs, and so on), others are related to the speciﬁc complications that arise because of the incorporation of international traﬃc ﬂows. This seems desirable when modelling (freight) transport ﬂows in small open economies characterised by very intense trade ﬂows with other countries. Indeed, the international component of transport ﬂows creates a number of complications that were captured in the design of the interregional model. For example, since in some countries a non-negligible share of all (especially freight) ﬂows consists of international transport and pure transit, a substantial fraction of external congestion, accident and pollution costs in such countries is generated by foreign transport ﬁrms. Moreover, it is well known that some transport externalities generate international spillovers; emissions of particular pollutants spill over to other regions (acid rain, global warming, and so on) and therefore generate external costs abroad. In addition, the prevalence of international transport ﬂows and pure transit...
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