Intro Lecture Flashcards
What is by far the main transport mode in the UK?
Road
What is one of the most pressing issues with managing road networks?
Congestion (aka traffic jams)
What do most economists think is key to managing and containing congestion?
Adequate pricing of road use
What kind of pricing should perhaps economists look at?
Pricing based off the congestion caused, eg which roads you travel on or at which times.
Why are ideas regarding congestion charges becoming more prevalent?
As the growth in EV vehicles means that the govt won’t gain revenue from fuel tax- which is often used to fund roads
Aside from roads, what else should a successful strategy for an efficient urban transport focus on?
The design of public transport services and tariffs
How do costs and prices differ?
The price of a good or service is what the buyer/user has to pay in
order to acquire/use the good/service. The cost of the good/service is
the value of all the resources required to produce it.
Why does the cost often not equal the price?
- The price often has a markup on the costs
- Costs such as externalities (congestion, fuel emissions etc) often aren’t included in the price
What is the generalised price of travel formula?
Generalized price = private user cost (resources and time) + tolls
(for cars)/fares (for PT) + other user taxes (e.g. fuel tax)
What is the generalised price of travel?
The sum of user costs + monetary charges imposed on the user
Why does the generalised price drive the user demand?
As it captures the total resources the user has to give up to undertake the activity.
Are taxes or tolls part of the generalised price?
Typically yes, but they are a a transfer from private sector to government, so are not a cost.
Is the generalized price generally equal to the social cost of the trip?
The generalized price is generally not equal to the social cost of the trip.
What are social costs?
Social costs are the sum of all costs the society as a whole sustains for a certain transport activity.
How do we calculate social costs?
Social costs = private user cost + operator cost +
external costs
