investment and infrastructure Flashcards
Draw the diagram illustrating the effects of increasing capcity
users will save time as a result reflected by the distance in the Y axis
- V is a vertical line representing output = traffic volume(simple)
cost = Y(Y/vk)
what are the assumptions of the capacity model
: capacity of the road network is a decision variable
• Congestion is improved by increasing capacity by expanding existing or making new ones
• Cost-benefit analysis is used to see whether to building a new road
what does UC depends on in terms of congestion
ratio between volume and capacity
- congestion gets worse with more traffic volume
assuming Volume is given
what is the optimal capacity
cost of an additional unit of capcity = MB in terms of reduced travel time cost for users
does optimal capcity mean that congestion = 0
no, since the cost of reaching that point for exceeds the benefit.
- reduce capacity by oen unit, the gov would save more than the benefit loss
A level of road network capacity such that there is no congestion cannot be optimal because
The cost saved by reducing capacity by one unit would exceeed the additional cost of congestion
draw the diagram which represents the effects of a toll, no change in capcacity
costs = c(V/vk) ,+t
genralised price = marginal benefit
draw a diagram which shows what happen when a toll is set? and later an increase in capcity
• Move from a level of capacity vk- to vk+
- by having an increase in capcity there will be an increase in time saved (Y axis)
- but an increase in the volume of traffic (X-axis)
what would happen if you increase capcity with no toll?
use a diagram
larger deadweight loss
- no toll, capcity would attract more trips, bigger deadweight loss on that road
diagram: sms is higher than UC –> TOO MANY PEOPLE ARE DIRVING
what would happen if you increase capacity with a toll?
if toll = Optimal level
No change in deadweight loss
- but benefit is more people are using the road
how does capcity effect the UC and SMC curves
they shift them upwards
what is a real life example of capacity?
• Duranton and Turner, 2011
• 1% increase in road infrastructure, leads to a 1.04% in population
-It doesn’t solve the issue, since it has a 1:1 relationship
reducing congestion by adding roads is pointless in the long-run
In the absence of road pricing, the additional traffic generated when expanding the capacity of a road network implies that
For any traffic volume, the marginal benefit of additional capacity is lower than with optimal pricing
