a) Road pricing refers to the charges incurred by road users, they include road tolls, distance or time based fees, congestion charges and charges designed to discourage use of certain classes of vehicles, fuel sources or more polluting vehicles (Wikipedia). Road pricing is very important as it allows for the efficient functioning of the market and it reduces externalities borne as a result of using transport facilities such as congestion. According to (Neil Kinnock) economic instruments are only effective if transport choices are sensitive to prices, meaning that the economic principles that are considered when setting the price for road users will only work if transport choices react to price. Economic principles that are taken into consideration when prices are set are scarcity, profit maximization, economic optimality, opportunity cost, market failure as well as the demand for road services.
The issue of scarcity when it comes to road pricing is one which needs to be taken into consideration because roads are scarce and should therefore be used in such a manner that every road user is able to make use of road effectively and in the most efficient way possible to them. (Louise Butcher, 2010, p.5) states that the theoretical case for what has come to be termed road pricing derives from the rationale that the users of roads, like the users of any other valuable and limited resource, should pay all the costs arising from their use, only then will the decisions on whether, when and how to travel be made correctly and only then will maximum productivity of road system and indeed the transport system more generally be obtained.
Road prices are formed to combat the issue of market failure. If the use for roads is be left unregulate...
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...ticity of demand for roads are charged much less prices. The revenue that is derived from charging high prices is the excess after the cost of providing the road facilities was taken into consideration.
Economic optimality is when the prices of using roads are set in such a way that the marginal social costs (externalities that result from the use of transport facilities) such the pollution, congestion and marginal private costs (the extra costs incurred for providing roads when the number of road users increase) should be equal. Also the marginal benefits for road users should be equal to the marginal private benefits that are earned from providing road facilities and as such it should be emphasized in the price charged for using road facilities. The above mentioned are some of the principles that guide policy makers to set road prices.
If we are going to be honest, the roadways for the state have NEVER been free. We have paid both state and federal gas tax for decades, now, and we also pay various taxes and licensing fees on our cars and our right to drive which go directly to the highway department in order to maintain the roads. Unfortunately, as we will soon see, the monies raised in this way cannot keep up with the state transportation departments needs, for a variety of reasons.
Purchasing a car is one of the biggest and most important decisions that someone will make during their lifetime. Over the past several years, the prices of a vehicle have increased significantly due to the rise of inflation. Economists compare averages of vehicles to calculate and determine the cost of every vehicle that ends up on the car lot. To determine the cost they interpret all the above information and include everything from the cost of making the vehicle to the time of selling it. In the long run, the demand for vehicles is inelastic because they become a necessity for many people. However, in the short run, the demand is elastic because the purchase of a new vehicle can be put off for a while.
Q1. Congestions on the roads are a problem for traffic management. What policies will you advocate for reducing congestion on streets and highways? Are congestion charges or building a toll road /bridge a better strategy for addressing this issue? Also, how would you address equity issues in the light of congestion charges implementations? Ch 14
commuters waste 38 hours per year stuck in traffic. In Washington D.C. and Los Angeles, the situation is even more serious with drivers squandering 67 and 61 hours, respectively, staring at the license plate of the stationary vehicle in front of them” (Keeping, n.d.). Henceforth, it is my speculation that a negative response to the issue of car congestion will generate some serious consequences for the foreseeable future. It is my prediction that a refusal to resolve this dilemma, will spawn complete chaos and anarchy upon the globes highways and byways. Therefore, it is vital that some type of action is taken beforehand in order to alleviate this issue before it gets out of hand. By and large, this final phase of this paper drives this assignment to its conclusion. Ergo, the ensuing portion of this case assignment will elaborate on highlights of this
The city of Virginia recently put a tax on the Elizabeth River Tunnel. The tunnel connects Norfolk and Portsmouth and didn’t develop tolls until February 2014 (Kelly 2014). This new toll forces residents, commuters, and visitors to pay a tax starting from one dollar to four dollars. The recent tunnel tolls added to the mid-town and downtown tunnels in Hampton roads are causing commuters and citizens to make some drastic lifestyle changes. Students and employees are considering changes to their employment and the universities they attend to save time and money as a result of the cost of commuting. If the average toll is two dollars a day, then people are spending about 60 dollars a month. What was once a relatively easy trip for many has become costly in both time and money. Because the addition of the tolls have divided the population into those who agree, and those who disagree; the media has played a large role in promoting the argument against the addition of the tolls. The 60 dollars people spend every month can go towards more than a toll; especially if a person is having very hard times. The tunnel tolls have caus...
In fact, transportation costs have a significant impact on cash-flows and also on the value of the project. If adding the budget for transportation cost is ignored, and even if the Merseyside project can add total throughput, the transportation division still cannot transfer the spared throughput due to the throughput is over the ability of the original transferring utility. Therefore, there will be a charge of ₤2millions which will be added to the project. Impact- Cannibalization& Ramp up period
Still, there is no permanence in the market price hike above the natural price caused by demand however abundant demand can be. The value will always depend on the expenses of its production, which includes profits to producers. Therefore, the factors that change permanent price in the expenses of production, and their relationship with demand are prime subjects of study.
...ct the income of their customers; however, when the supply is higher the customer may be earning more.
Since fuel is regarded as a necessity, the increase of fuel prices would have a certain impact on the Australian economy. This will have an effect on a variety of economic aspects which include; demand and supply, elasticity, market equilibrium and disposable income. The goal of this analysis is to discuss the effect that the rise in petrol, holding all things constant (Ceteris Paribus), will have on the Australian economy.
We can partially agree to what Kerzner has to say about quantifying cost and benefits. However, it is indeed; very much a practical approach studied by Kerzner who states cost a phenomenon difficult to quantify. But it would be gross understatement to suggest that it is rather more difficult than quantifying benefits. As in the above answer, two different examples are quoted to back Kerzner’s claim. The example of the cost of airport and train will justify my stance on the subject. It is difficult to quantify the cost of building up an airport even after conducting cost-benefit analysis as the operating and periodic costs vary but can we measure the number of citizens who will be benefitted from airport compared to train. I totally agree with your take on the subject but we can partially agree with Kerzner as he backs his opinions with practical justifications.
... Also important is the price of complements, or goods that are used together. When the price of gasoline rises, the demand for cars falls.
For formulating a more efficient transport pattern, there are some specific strategies. Firstly, government can encourage people to pay more attention to public transit. The actual data about transit use from most cities indicates that transit use is growing in many cities, in addition, some developed cities have been reducing their car use and pay more attention to the public transport (Newman, 1999). Encouraging urban citizens use more public transit is effective in reducing the quantity of private cars. It is generally known that private cars have brought great pressure on urban traffic. Secondly, government can restrict cars based on the “odd-and-even l...
Hoboken NJ: Wiley, 2009. Web. Dodson, Edward N. "Cost-Effectiveness in Urban Transportation. " Operations research 17.3 (1969): 373-94.
The development of every nation hinges on the effectiveness of their transportation systems. Movement of goods, services and people to and from locations is made possible by transportation systems. The importance of effective transportation systems cannot be over-emphasized. Many countries face transportation problems and my country Ghana is no exception. A trip of about 30 minutes usually takes about an hour or more due to traffic jams. This is seriously impacting productivity and has become a topical issue in the country. The situation is the same in Uganda where I currently work. To this end, Transportation Engineers are needed to design roads/ highways that will stand the test of time, plan effective traffic management systems to reduce
One method that Toyota can consider is using the price elasticity of demand to determine whether to increase or decrease the sale price of their automobiles. The responsiveness or sensitivity of consumers to a price change is measured by a product's price elasticity of demand (McConnell & Brue, 2004). Market goods can be described as elastic or inelastic goods as change in quantity demanded for that good. If demand is elastic, a decrease in price will increase total revenue. Even though a lower price would generate lower sales revenue per unit, more than enough additional units would be sold to offset lower price (McConnell & Brue, 2004). In a normal market condition, a price increase leads to a decreased demand, and a price decrease leads to increased demand. However, a change in income affecting demand is more complex.