Publication: On the change in surpluses equivalence: measuring benefits from transport infrastructure investments
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Date
2007
Journal Title
Journal ISSN
Volume Title
Publisher
EUT Edizioni Università di Trieste
ISTIEE Istituto per lo studio dei trasporti nell’integrazione economica europea
ISTIEE Istituto per lo studio dei trasporti nell’integrazione economica europea
Abstract
Reductions in transport costs resulting from infrastructure improvements generate benefits that can be
measured as surplus changes either at an economy-wide scale (social welfare changes) or, as is common
practice in cost-benefit analysis (CBA), at a transport market level as transport users’ surplus changes. In
this paper we look at an economy with spatially separated markets embedded in a transport network (a
spatial price equilibrium model) to study the equivalence between these two benefit measures. Three
different product market competition arrangements are considered. A similar question and strategy is
presented in Jara-Díaz (1986) employing a two-node network and extreme competition assumptions on
the production side: perfect competition and monopolistic production with arbitrage. We extend his work
by additionally considering perfect collusion (monopoly without resale) and Cournot-Nash oligopoly
under flow-dependent transport costs (i.e. congestion in transport). Numerical simulations in a three-node
network with and without transshipment nodes, illustrate our main results.
Description
Keywords
Cost-benefit analysis, Indirect benefits
Citation
José Meléndez-Hidalgo, Piet Rietveld, Erik Verhoef, "On the change in surpluses equivalence: measuring benefits from transport infrastructure investments", in: European Transport / Trasporti Europei, XII (2007) 36, pp. 107-140.