Elgar original reference
Edited by André de Palma, Robin Lindsey, Emile Quinet and Roger Vickerman
André de Palma, Robin Lindsey, Emile Quinet and Roger Vickerman The transport sector holds a special place in economics for a number of reasons. First, several basic concepts that are widely used in economic analysis originated from the study of developments and policy issues in transport. Jules Dupuit (1844) established the foundations of surplus theory and welfare economics while he was grappling with the social value of transport infrastructure. The seminal theory of discrete choice developed by Daniel McFadden (1974) and others was motivated by a desire to understand and predict individual choices of transport mode. William Vickrey’s (1963) well-known work on transport congestion and queuing has been applied well beyond the transport sector. And the self-financing theorem due to Herbert Mohring and Mitchell Harwitz (1962) arose from the question of whether efficient traffic congestion charges suffice to pay for the construction of an optimally sized road. Second, the costs of transport are central to economic activity as Adam Smith (1776) recognized in his famous observation on how the scale of production is limited by the extent of the market. Indeed, transport costs play a special role in several fields of economics. In spatial economics transport costs underlie land rent (Johann Heinrich von Thünen), location choices of firms (Alfred Weber) and the existence of location and price equilibrium in competitive markets (Harold Hotelling, 1929). Transport costs are also central in the new economic geography (Paul Krugman, 1991) which seeks to explain the extent of agglomeration in human activity over...