Summary Transport Economics

Topics: Supply and demand, Economics, Cost Pages: 35 (7814 words) Published: October 1, 2014
Summary Transport Economics
Chapter 33
3.1 definitions3
3.2 determinants of demand3
3.3 Peak problem in road transport4
3.4 elasticity of demand5
3.5 Market price6
3.6 market welfare6
3.7 9/11 and the effects on the market7
3.8 The problem of rural demand7
Chapter 47
4.1 Definitions7
4.2 Classification of costs according to their nature7
4.3 Classification of costs according to their scale8
4.4 Other types of cost important in TEM9
4.5 Classification of revenue9
4.6 Profit maximization and alternative objectives10
5 Competition and Contestability 10
5.1 introduction 10
5.3 The adjustment mechanism12
5.7 Contestable markets12
6 Monopoly13
6.1 introduction13
6.2 Modeling the monopoly13
6.3 price discrimination14
6.4 Yield management16
6.7 natural monopolies16
8 Oligopoly16
8.2 location decisions17
8.3 the European air industry17
9 Externalities18
9.2 missing markets18
9.3 Lack of ownership19
9.5 congestion as an externality20
12 privatization and deregulation20
12.2 arguments in favor of nationalization and against deregulation21 13 Cost benefit analysis21
13.1 The need for, and types of cost benefit analysis21
13.2 the steps of a cost benefit analysis22
13.5 the limitations of cost benefit analysis23
16 Traffic congestion24
16.2 The principals behind charging people for road usage24 16.3 Experiences and types of road user charging24
16.5 how widely should charging be implemented25
16.6 The case for building more road capacity25
16.7 Issues to be resolved to make road pricing a practical policy25 Santo’s article26
10 public goods27
College: Transport economics inland shipping27
College: Maritime economics31

Chapter 3
3.1 definitions
The term “demand” refers to the amount the consumers are willing and able to pay for a certain product, In transport there is also another form of demand namely “Derived demand” this is “where” the products are wanted. A good example of derived demand is: petrol, the consumers demand is not the petrol but the distance to be travelled. The majority of the demand for passengers transport is derived. The law of demand states that as the price increasing the demand is decreasing A demand curve is displayed as follows:

There are two parts to the explanation as to why the law of demand exists: 1) “income effect “ when the prices increase obviously the purchasing power of the consumers will decrease. (assumed their income does not change) 2) “Substitution effect” When the price of a certain good increases the consumer is likely to look for substitutes which fulfill the same needs, (looking for cheaper alternatives). The above is easily to implacable to the transport sector.

There are also two exeptions to the law of demand: “Giffen goods” and goods of “conspicuous consumption” Only the later are applicable to the sector of transport. These product require a certain attitude from the consumer. People buy certain products for a higher price than they should due to the status they “obtain” from it. This is hard to explain from and economical behavior point of view. 3.2determinants of demand

The most important determinant of quantity demanded of a product is the price to pay. Obviously there are several other determinants influencing demand, they are listed below: The price, availability, and quality of substitutes

The price, availability and quality of complementary products (a complement is a product which is needed for consuming the actual product, E.G petrol) Income changes
Population changes
Popularity effects,
For example it is not “cool” to travel with public transportation Speed
Both important for transporting goods and passengers. (think about inventory and interest costs). Reliability
think in terms of paperwork and administration for different modes of transport. Security
risk of product getting damaged etc.

Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Economics summary Essay
  • economics Essay
  • Summary of Economics of Strategy Book Essay
  • Summary Micro Macro Economics Essay
  • Economics for Business Summary Essay
  • Economics Essay
  • Essay on Economic Summary
  • summary Essay

Become a StudyMode Member

Sign Up - It's Free