CONSUMER SURPLUS DOES NOT APPLY TO HIGHWAY TRANSPORTATION ECONOMY

The consumer surplus concept is based on the price-demand relationship that states that, if the consumer price of a commodity is lowered or increased, then the number of units sold will be reduced when price increases and increased when price decreases, if all other factors remain constant. Consumer surplus is the difference between the total price paid by all customers and the total amount those customers would have been willing to pay. This paper concludes that the consumer surplus concept has not justifiable application in the anlaysis of the economy of highway transportation investment alternatives. This paper is related to only those consequences of highway improvement that are market priced: highway facility costs, motor vehicle running costs, traffic accident costs, and travel time. This paper is not concerned with the decision-making process except to furnish the decision maker with a thorough and reliable analysis of the transportation costs for each alternative considered. Traffic volume composition is discussed, and specific attention is paid to generated, or induced, trips. For the time span of years chosen for the analysis of transportation economy, it is concluded that generated traffic (trips that come into being solely because of the reduction of trip costs) cannot be estimated for the analysis period reliably. Furthermore, estimating consumer surplus is not necessary because total transportation cost of each alternative considered is the only relevant factor. The shift of the price demand as highway design or traffic control changes is discussed. This shift cannot be determined either in scope or direction, and, therefore, the net change in consumer surplus cannot be determined.

Media Info

  • Media Type: Print
  • Features: Figures; References; Tables;
  • Pagination: pp 1-19
  • Monograph Title: Application of economic analysis to transportation problems
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00129476
  • Record Type: Publication
  • ISBN: 0309024560
  • Files: TRIS, TRB
  • Created Date: Mar 10 1976 12:00AM