Cost-benefit analysis of transport improvements in the presence of spillovers, matching and an income tax

TY - JOUR

T1 - Cost-benefit analysis of transport improvements in the presence of spillovers, matching and an income tax

AU - Eliasson, Jonas

AU - Fosgerau, Mogens

PY - 2019/6/1

Y1 - 2019/6/1

N2 - This paper addresses the problem of measuring the welfare benefits of a transport improvement. We formulate and analyze a rich spatial model that allows for spillovers, matching and income tax, in a setting with multiple work and residential locations and very general worker heterogeneity. The conventional consumer surplus captures part of the benefits and is calculated based on predictions of changes in travel demand and transport costs. The issue is to determine which so-called wider impacts to add to this. We find that adding the change in total output as a wider impact leads to double-counting of benefits. The output change due to spillovers should be added, while the output change due to matching is already partly included in the consumer surplus. These results are useful for applied cost-benefit analysis of transport policies.

AB - This paper addresses the problem of measuring the welfare benefits of a transport improvement. We formulate and analyze a rich spatial model that allows for spillovers, matching and income tax, in a setting with multiple work and residential locations and very general worker heterogeneity. The conventional consumer surplus captures part of the benefits and is calculated based on predictions of changes in travel demand and transport costs. The issue is to determine which so-called wider impacts to add to this. We find that adding the change in total output as a wider impact leads to double-counting of benefits. The output change due to spillovers should be added, while the output change due to matching is already partly included in the consumer surplus. These results are useful for applied cost-benefit analysis of transport policies.

KW - Agglomeration

KW - Cost-benefit analysis

KW - Matching

KW - Spillovers

KW - Transport policy

UR - http://www.scopus.com/inward/record.url?scp=85062710604&partnerID=8YFLogxK

U2 - 10.1016/j.ecotra.2019.02.001

DO - 10.1016/j.ecotra.2019.02.001

M3 - Journal article

AN - SCOPUS:85062710604

SN - 2212-0122

VL - 18

SP - 1

EP - 9

JO - Economics of Transportation

JF - Economics of Transportation

ER -