Table Of ContentHalf-title
Transport Economics
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Title page
Transport Economics
4th Edition
Kenneth Button
University Professor, Schar School of Policy and Government,
George Mason University, USA
Cheltenham, UK • Northampton, MA, USA
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Copyright page
© Kenneth Button 2022
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means, electronic, mechanical or
photocopying, recording, or otherwise without the prior permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
Edward Elgar Publishing, Inc.
William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA
A catalogue record for this book
is available from the British Library
Library of Congress Control Number: 2022931653
ISBN 978 1 78643 566 8 (cased)
ISBN 978 1 78643 568 2 (paperback)
ISBN 978 1 78643 567 5 (eBook)
Typeset by Cheshire Typesetting Ltd, Cuddington, Cheshire
EEP BoX
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Contents
Preface x
List of acronyms xii
1 Transport, Economics, and Economists 1
1.1 Some background 1
1.2 A brief history of transport economics 5
1.3 The subject matter of transport economics 8
1.4 The economic characteristics of transport 15
1.5 This book 17
References 20
2 Transport and the Economy: Some Numbers 22
2.1 Introduction 22
2.2 The global picture 24
2.3 Transport at the national level 31
2.4 Local transport 37
2.5 Emerging trends 44
2.6 S ome comments on the short-term effects of Covid-19 on
transport 50
2.7 Where are the numbers? 52
References 54
Exhibit Response of air transport to a pandemic 46
3 Transport and Location 55
3.1 The desire for movement and mobility 55
3.2 Transport: the ‘chicken’ or the ‘egg’? 57
3.3 Industrial location and transport 60
3.4 Economic gateways and corridors 67
3.5 Output, market areas, and transport costs 70
3.6 Urban transport and land values 74
3.7 Urban wages 80
References 83
Exhibit The impact of parking policy on house prices in the
Netherlands 79
4 The Demand for Transport 85
4.1 Demands for transport 85
4.2 Influences on travel demand 87
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vi TRANSPORT ECONOMICS, 4TH EDITION
4.3 Pricing a transport service 90
4.4 Trip purpose 96
4.5 Levels and methods of charging 97
4.6 The time period 98
4.7 The absolute level of the price change 100
4.8 Income levels 101
4.9 The price of other transport services 104
4.10 Tastes, human desires, and motives 106
4.11 The notion of a ‘need’ for transport 109
4.12 The valuation of travel time savings 112
4.13 The demand for car ownership 119
4.14 What does ‘behavioral economics’ tell us? 126
References 130
Exhibit Demand shocks on airline fares produced by high-speed rail
transport 91
Exhibit Fuel efficiency of United States cars following the 1973 and
1979 oil crises 93
Exhibit Meta-analytical synthesis of demand elasticity results 103
Exhibit The role of ancillary revenues in airline finances 108
Exhibit When London Underground workers go on strike 128
5 Direct Costs of Transport 134
5.1 Factors influencing the supply of transport 134
5.2 Fixed and variable costs 136
5.3 Economies of scale, scope, density, experience, and commonality 149
5.4 Specific, joint, and common costs 155
5.5 Problems of common cost allocation: the road and rail track
cases 157
5.6 Transport user costs and the notion of generalized costs 164
5.7 The bunching of public transport services 170
5.8 Economic performance 172
5.9 Costs and the measurement of economic efficiency 175
References 182
Exhibit The container and world trade 143
Exhibit Measuring perceived costs of driving 167
6 The External Economic Costs of Transport 186
6.1 Introduction 186
6.2 Externalities 187
6.3 Transport’s implications for the environment 190
6.4 The valuation of externalities 193
6.5 The magnitude of the environmental externality problem 201
6.6 Energy use 214
6.7 Introduction to traffic congestion 219
6.8 The economic costs of congestion 225
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CONTENTS v ii
6.9 Refinements on the basic congestion model 227
6.10 Some broad aggregate calculations 232
References 233
Exhibit The economic costs of CO emissions 196
2
Exhibit The economic costs of the Amoco Cadiz oil spill 198
7 The Pricing of Transport 236
7.1 The principles of pricing 236
7.2 Matching supply with demand 237
7.3 Marginal cost pricing 243
7.4 Difficulties of ‘second-best’ situations 246
7.5 Price differentiation, price discrimination, and yield
management 249
7.6 Pricing with stochastic demand 265
7.7 The problem of the peak 267
7.8 Transport subsidies, operational objectives, and pricing 270
7.9 Market instability, suboptimal supply, and the empty core 273
7.10 Indirect pricing 276
References 278
Exhibit The issue of predatory pricing 240
8 Containing the Environmental Costs of Transport 281
8.1 Introduction 281
8.2 The main economic approaches 282
8.3 Marketable and tradeable permits 283
8.4 The OECD’s ‘polluter-pays principle’ 287
8.5 More on environmental standards 294
8.6 Transport subsidies and the environment 298
8.7 Protecting the sufferers 303
8.8 Energy use 304
8.9 Safety and accidents 315
References 318
Exhibit Marketable permits for lead in gasoline 286
Exhibit The ‘Ubernomics’ of app-based ride-hailing 301
Exhibit ‘Boris bikes’ 311
9 Optimizing Traffic Congestion 320
9.1 Economics and optimal traffic 320
9.2 ‘Road pricing’ 321
9.3 Applications of urban road pricing 326
9.4 Some difficulties with road pricing 329
9.5 Impacts of road pricing 338
9.6 Parking policies 342
9.7 Congestion pricing at airports 344
9.8 Seaports congestion 356
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viii TRANSPORT ECONOMICS, 4TH EDITION
9.9 Non-pricing options for reducing congestion 358
9.10 ‘Micromobility’ 362
References 363
Exhibit The initial London congestion charge scheme 340
10 Economics and Transport Logistics 366
10.1 Introduction 366
10.2 Transport logistics 367
10.3 The costs of warehousing and inventory holdings 370
10.4 Consolidation and trans-shipment 375
10.5 Mode choice 376
10.6 Urban logistics 380
10.7 Green logistics 382
10.8 International logistics 384
10.9 Big data, supply chains, and economics 386
10.10 Security 387
References 395
Exhibit Costs and benefits of transport security 389
11 Investment Criteria: Private and Public Sector Analysis 398
11.1 Transport and infrastructure 398
11.2 Basic theories of investment policies 400
11.3 Commercial and social approaches to investment 403
11.4 Public–private partnerships 407
11.5 The theory of cost–benefit analysis 412
11.6 Coping with network effects 417
11.7 Cost–benefit analysis in practice and variations on the theme 419
11.8 Comparability between appraisal techniques 428
11.9 Assessing the effect on national income 431
11.10 Some institutional considerations 434
References 436
Exhibit The Third London Airport Study 421
12 Transport Planning and Forecasting 438
12.1 The development of transport planning 438
12.2 The ethos of transport planning 443
12.3 Traffic modeling and forecasting 448
12.4 Sequential travel demand forecasting 453
12.5 Disaggregate modeling 460
12.6 Interactive and stated-preference modeling 463
References 465
Exhibit Blue-print planning: L’Enfant’s transport plan for
Washington DC 439
Exhibit Accuracy in traffic demand forecasting 451
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CONTENTS i x
13 Transport and Economic Development 468
13.1 Transport’s Role in Development 468
13.2 Economic growth theory and transport 469
13.3 Transport infrastructure investment and economic productivity 476
13.4 The multiplier impacts of a transport investment 481
13.5 Transport economics in less developed countries 486
13.6 The transport policy of the European Union 492
13.7 Transport effects on regional and urban development 504
References 512
Exhibit Employment implications of the United States’ federal
highway system 471
Exhibit Railroads and canals in the United States’ economic
development 474
Exhibit Infrastructure investment and economic productivity 478
Exhibit Some macro- and microeconomics of elevator travel 506
14 Political Economy and Transport Regulation 514
14.1 Underlying issues 514
14.2 Regulation theory 517
14.3 Monopoly power 522
14.4 Prioritizing transport policies 530
14.5 Paths of regulatory reform 541
14.6 Studying regulatory reform 546
14.7 Disruptive innovation 551
14.8 Coordination via the market, or by direction? 554
References 557
Exhibit Regulated and unregulated airlines 526
Name index 559
Subject index 567
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