Financing road infrastructure by savings in congestion costs: A CGE analysis |
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Authors: | Klaus Conrad Stefan Heng |
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Affiliation: | Mannheim University, Department of Economics, Seminargeb?ude A 5, 68131 Mannheim, Germany (e-mail: kconrad@rumms.uni-mannheim.de), DE
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Abstract: | Division of labor, outsourcing in manufacturing and just-in-time production require the provision of a good and sufficient
road infrastructure system. The society is used to mobility, preference for it even increases, and the full benefit of competition
can only be realized if special distances can be overcome at low cost of transportation. Since the 1970's, however, the negative
aspects of an intensive extension of road infrastructure has dominated the political decision process in Germany.
The objective of this paper is to model the aspects of bottlenecks in road infrastructure, of congestion costs and of the
effect of investment in infrastructure in a computable general equilibrium framework. A long-run “business as usual” simulation
will show how congestion and its cost will develop over time. The increasing costs of congestion indicate a necessity to act.
We will therefore raise the fuel tax to partly finance infrastructure investment. We will then compare the cost of the addition
in infrastructure with the savings in congestion costs in order to see whether this policy measure is self-financing.
Received: April 2000/Accepted: August 2001 |
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Keywords: | JEL classification: R 41 R 42 R 15 H 54 D 58 |
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