Financing road infrastructure by savings in congestion costs : a CGE analysis

Division of labor, outsourcing in manufacturing and just-in-time production require the provision of a good and sufficient road infrastructure system. The society is used to mobility, preference for it even increases, and the full benefit of competition can only be realized if special distances can...

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Bibliographic Details
Published in:The Annals of regional science 2002-02, Vol.36 (1), p.107-122
Main Authors: CONRAD, K, HENG, S
Format: Article
Language:English
Subjects:
Bgi / Prodig
Commodities
Competition
Congestion
Cost control
Costs
Economic development
Equilibrium
Fuel taxes
Geography of markets and trade services
Germany
Human geography
Infrastructure
Inland transportation
Investments
Market prices
Outsourcing
Regional studies
Roads
Roads & highways
Simulation
Suppliers
Taxation
Traffic
Transport
Transport economics
Transport infrastructure
Transportation planning
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Summary:Division of labor, outsourcing in manufacturing and just-in-time production require the provision of a good and sufficient road infrastructure system. The society is used to mobility, preference for it even increases, and the full benefit of competition can only be realized if special distances can be overcome at low cost of transportation. Since the 1970's, however, the negative aspects of an intensive extension of road infrastructure has dominated the political decision process in Germany. The objective of this paper is to model the aspects of bottlenecks in road infrastructure, of congestion costs and of the effect of investment in infrastructure in a computable general equilibrium framework. A long-run "business as usual" simulation will show how congestion and its cost will develop over time. The increasing costs of congestion indicate a necessity to act. We will therefore raise the fuel tax to partly finance infrastructure investment. We will then compare the cost of the addition in infrastructure with the savings in congestion costs in order to see whether this policy measure is self-financing.
ISSN:0570-1864
1432-0592
DOI:10.1007/s001680100063