The search for higher utility alternatives underpins the empirical observation that longer-run demand elasticities tend to be higher than in the short run. However, there is another implication, that there will be a bias if consumer surplus is estimated by the use of a static model. This paper shows that there is a special case where using a static elasticity does not give bias.
Topic: 14.8 Other
The costs and benefits of safety cannot logically be separated from the costs and benefits of mobility. Although the value of life and the value of time are difficult to estimate, there are means available for approaching monetary values. Calculations are given for one well-known safety intervention: the US 55 mph speed limit.
This paper looks at the differences between the private firm and the public planner in timing investment in projects involving large sunk costs in growing markets. It shows that competition in the private sector will drive firms to invest earlier than the socially preferred date whilst a low ratio of private (producer) to public (producer plus consumer) benefits will cause them to delay relative to the socially preferred date. The paper looks at policy instruments for altering the private sector’s timing decision.
The paper examines arguments which suggest that the investment plans of the UK’s nationalised industries before the end of the 1970s were inadequately constrained by the control mechanisms then in place but the newly privatised utilities subject to price cap regulation have inadequate incentives to invest. Comparison of the likely social costs of underinvestment and overinvestment suggest that the former will generally be higher under existing regulatory mechanisms. The paper concludes by suggesting solutions to the dilemma posed.
Benefit-Cost Rules for Urban transit Subsidies. An Integration of Allocational, Distributional and Public Finance Issues
In determining the level of subsidy, and its use in reducing fares or increasing frequencies, weight should be given to the comparative benefits accruing to different income groups. A local authority will be influenced in its decision by the proportion of the cost that is borne by central government.
Conventional cost-benefit analysis treats a dollar as a dollar, to whomsoever it accrues. Finer analysis, by income and nature of the trip, may reveal that most of the benefit accrues to high-income groups. The author applies the methodology to corridor planning in the San Francisco Bay Area.
The author’s dynamic formulation leads him to a complete presentation of optimum investment policies. When there are large economies of scale, “bang-bang” policies (discontinuous periods of discrete provision of capacity) will be best.
The author finds that marginal cost pricing leads to slower expansion of capacity than either higher or lower pricing. transport planners are advised how to find the same optimum expansion dates under common forms of user fees as under marginal cost pricing.
The author urges that the theory of site value transfer (the capitalised form of differential rents for locational advantage) can overcome the difficulty of valuing intangibles in choosing between transport investments. He recommends further research.
A case study shows the net benefits that would result from various measures to restrain the use of cars in the centre of Boston, Mass. Similar benefits would be likely in other cities.