Handbook of Research Methods and Applications in Transport Economics and Policy
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Handbook of Research Methods and Applications in Transport Economics and Policy

Edited by Chris Nash

Transport economics and policy analysis is a field which has seen major advances in methodology in recent decades, covering issues such as estimating cost functions, modelling of demand, dealing with externalities, examining industry ownership and structure, pricing and investment decisions and measuring economic impacts. This Handbook contains reviews of all these methods, with an emphasis on practical applications, commissioned from an international cast of experts in the field.
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Chapter 19: Economic impacts of transport policy

Roger Vickerman


Transport is a significant contributor to the economy in terms of its share of both output and employment. Most activities involve transport which is therefore not just an output which can be traded nationally and internationally, but is a key input to all other sectors of the economy. The transport sector is, however, a diverse sector making it difficult to quantify the full contribution and hence the full impact of any changes to transport provision, for example, through investment in major transport infrastructure, is often estimated imprecisely. There are three major factors which contribute to this. One is that a considerable part of transport, whether passenger or freight, is provided privately ‘on own-account’. The second is that, at least until recently, in most countries the majority of non-own-account transport services were provided by the public sector. The third factor is that transport generates considerable externalities. These are both negative, particularly those relating to environmental impacts and congestion, and positive, those relating to the social effects of providing accessibility to facilities and for personal interaction. Taken together this implies that conventional economic measures of a sector’s impact using parameters determined by markets are not applicable. Added to these is the problem that the direct benefits of transport are themselves often difficult to quantify since they require the monetising of non-marketable factors such as time savings and accident reductions.

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