Transport Issues<br />
Is congestion new?<br />NO!<br />In ancient Rome, chariots were prevented from entering the city at certain times to stop ...
The link between congestion and incomes<br />There is a link between incomes and congestion<br />As people’s incomes incre...
Benefits<br />Reduced journey times<br />Increased productivity<br />More leisure time – could link (analysis) to increase...
Tackling congestion<br />The government could tackle congestion in a variety of ways such as<br />Building more roads<br /...
Socially efficient private motoring<br />A socially efficient level of road usage would be at the point where MSB = MSC<br...
Benefits<br />Satisfaction (MPB)<br />Importance of journey<br />Comfort<br />Convenience<br />Are there any external bene...
Costs<br />Private costs – fuel, depreciation, road charges<br />External costs – congestion (which leads to an increase i...
MSC<br />Marginal social costs and benefits<br />MB = MSB<br />Road usage<br />
Socially efficient level<br />In order to achieve an equilibrium between MSB and MSC there is a need to ensure that car us...
Socially efficient level <br />If the private costs of road use are lower than the full social costs, cars and roads will ...
Public transport<br />An alternative is to subsidise less socially costly methods of transport so they can compete more wi...
Building new roads<br />Have high opportunity costs<br />Controversial <br />Use up land <br />Environmental consequences<...
Improving transport<br />Encourage substitutes<br />Subsidise bus and train fares <br />Bus and cycle lanes<br />Trams <br...
Raise cost of motoring<br />Change market signals by increasing cost of motoring<br />Road tax changes – but the fixed cos...
Road pricing<br />Tend to be unpopular<br />Price needs to be high enough to discourage use<br />If the charge is high eno...
Alcohol strategy<br />Based on the strategies used for road use, what could be a strategy that would be useful for alcohol...
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Transport

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Transport

  1. 1. Transport Issues<br />
  2. 2. Is congestion new?<br />NO!<br />In ancient Rome, chariots were prevented from entering the city at certain times to stop congestion<br />In London, before cars were invented, there was congestion from horse and carriages<br />So congestion is not a new problem – but has got worse<br />
  3. 3. The link between congestion and incomes<br />There is a link between incomes and congestion<br />As people’s incomes increase, they move away from public transport and purchase cars<br />Road travel has a significant positive income elasticity of demand<br />There are benefits to road travel – what would these be?<br />
  4. 4. Benefits<br />Reduced journey times<br />Increased productivity<br />More leisure time – could link (analysis) to increased productivity?<br />Less waiting time for goods/services<br />More travel opportunities<br />
  5. 5. Tackling congestion<br />The government could tackle congestion in a variety of ways such as<br />Building more roads<br />Improve public transport<br />Raise the cost of motoring<br />Introduce road pricing<br />
  6. 6. Socially efficient private motoring<br />A socially efficient level of road usage would be at the point where MSB = MSC<br />MSB = MPB + positive externalities<br />MSC = MPC + negative externalities<br />
  7. 7. Benefits<br />Satisfaction (MPB)<br />Importance of journey<br />Comfort<br />Convenience<br />Are there any external benefits?<br />
  8. 8. Costs<br />Private costs – fuel, depreciation, road charges<br />External costs – congestion (which leads to an increase in private costs e.g. fuel costs), pollution, global warming<br />
  9. 9. MSC<br />Marginal social costs and benefits<br />MB = MSB<br />Road usage<br />
  10. 10. Socially efficient level<br />In order to achieve an equilibrium between MSB and MSC there is a need to ensure that car users pay the true cost of their usage<br />This means that the government use strategies which ensure motorists internalise the full costs of road usage<br />Is there a link here to alcohol?<br />
  11. 11. Socially efficient level <br />If the private costs of road use are lower than the full social costs, cars and roads will be overconsumed – a socially efficient situation requires that prices for road use should rise<br />That would lead to the price mechanism rationing road use between competing users and ensure that costs and benefits are in equilibrium<br />
  12. 12. Public transport<br />An alternative is to subsidise less socially costly methods of transport so they can compete more with roads<br />However, government failure needs to be taken into account when thinking about transport policies<br />Some decisions have unintended consequences which make them less optimal<br />
  13. 13. Building new roads<br />Have high opportunity costs<br />Controversial <br />Use up land <br />Environmental consequences<br />Encourages overconsumption rather than bringing consumption into line with the full social costs<br />More road use means less use of public transport – which leads to less public transport being used and therefore cutbacks in public transport. <br />This will affect those who do not have access to private transport which tends to be the poorest<br />Solves congestion in the short run but encourages traffic volumes to increase in the long run<br />
  14. 14. Improving transport<br />Encourage substitutes<br />Subsidise bus and train fares <br />Bus and cycle lanes<br />Trams <br />Substitution depends on the quality of the substitute – needs to be frequent, cheap and reliable<br />Perception of social status?<br />
  15. 15. Raise cost of motoring<br />Change market signals by increasing cost of motoring<br />Road tax changes – but the fixed cost element is not a discouragement <br />Fuel tax – fuel duty escalator – fuel duty rise needs to be substantial to have an effect and is inflationary <br />Fuel tax is unpopular<br />
  16. 16. Road pricing<br />Tend to be unpopular<br />Price needs to be high enough to discourage use<br />If the charge is high enough then the charge can cover the full marginal social cost and achieve a socially optimum level of road use<br />
  17. 17. Alcohol strategy<br />Based on the strategies used for road use, what could be a strategy that would be useful for alcohol?<br />Can you encourage users of alcohol to take full account of the marginal social costs?<br />

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