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Economic Theories on Transport Policy - Dictionary of Arguments

Mause I 459
Transport policy/Economic Theory: social problems of transport policy are primarily presented through the consideration of costs and benefits. If competition now prevails in mobility markets, and the interplay of supply and demand leads to equilibrium quantities and equilibrium prices, there is in principle no need for state intervention from an economic point of view.
External effects/externalities: occur when an economic entity passes some of its costs on to others ((s) that have no influence on the design) or makes a profit without paying for it. See (1) See also Prisoner's Dilemma/Ostrom, (> freerider problem).
Infrastructure: e.g. road network: since nobody is excluded as far as possible and there is rivalry in consumption, an unequal distribution of costs and benefits can arise. While construction is generally supported by a local authority, the circle of users goes beyond this.
Mause I 460f
Consumption: consumption, i.e. the consumption of transport infrastructure and its rivalry, essentially refers to space and manifests itself in traffic jams.
Problem: The reason for overuse is that the actors always have their private costs in mind.
Marginal costs: when traffic becomes more congested, the marginal private costs of road use will no longer only correspond to marginal social costs. Every other road user contributes to the fact that the space becomes even scarcer.
Solution: an economic solution is the internalisation of external costs. (e.g. tolls, road tolls).
Externalities: if the transport sector is considered with all road users, there are no uninvolved third parties. Then congestion costs are not external costs but the result of too few traffic routes. (Stock and Bernecker 2014, p. 287).
External benefits: In addition to external costs, the transport sector also generates external benefits in an economy. Freight transport is what makes the division of labour and specialisation possible and therefore has positive effects on income, growth and employment. Passenger transport favours the development of densely populated areas (agglomeration) and the exchange of knowledge. Individual economic consumer demand would not take these aspects into account in the respective utility function and would therefore be too low (see Stock and Bernecker 2014, p. 292).
Transport policy: can start at three points: 1. externalities, 2. capacity problems, 3. lack of competition.
Investments: Problem: Problems can occur when a large specific (or irreversible) investment has to be made to enter the market. This means that an investment in the production process can only be used for this specific market and can no longer be used for other purposes in the case of a market exit (cf. Baumol et al. 1988, p. 7) (2).
E.g. this applies to a rail network which is necessary for rail traffic but can also be used exclusively for this purpose.

1. Stock, Wilfried, und Tobias Bernecker, Verkehrsökonomie. Eine volkswirtschaftlich-empirische Einführung in die Verkehrswissenschaft, 2. Aufl. Wiesbaden 2014.
2. Baumol, William J., John C. Panzar, und Robert D. Willig. 1988. Contestable markets and the theory of industry structure. San Diego 1988.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Economic Theories
Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

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