COST-BENEFIT ANALYSIS AND THE SECOND BEST LAND USE FOR TRANSPORTATION

Whether the naive cost-benefit analysis based on market prices tends to overinvest in roads is examined in the second best situation where traffic congestion is unpriced. The benefit and the cost calculated by using market prices are compared at the second best optimum. It is shown that the benefit exceeds the cost near the center of a city. However, if the compensated demand for housing has a price elasticity less than 1, the benefit becomes smaller than the cost near the edge. /GMRL/

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  • Corporate Authors:

    Academic Press Incorporated

    111 Fifth Avenue
    New York, NY  United States  10003
  • Authors:
    • Kanemoto, Y
  • Publication Date: 1977-10

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Filing Info

  • Accession Number: 00183020
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Dec 12 2002 12:00AM