Financing road infrastructure by savings in congestion costs: A CGE analysis

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URL:	https://madoc.bib.uni-mannheim.de/1032
URN:	urn:nbn:de:bsz:180-madoc-10321
Document Type:	Working paper
Year of publication:	2000
The title of a journal, publication series:	Discussion Papers / Institut für Volkswirtschaftslehre und Statistik
Volume:	579
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series:	Institut für Volkswirtschaftslehre und Statistik > Discussion Papers
Subject:	330 Economics
Subject headings (SWD):	Infrastruktur , Straßennetz , Politische Entscheidung , General Equilibrium Environmental Model
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. 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. Given the necessity to act we will 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.
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