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Maximizing, measuring, and not double counting transportation-improvement benefits: A primer on closed- and open-economy cost-benefit analysis

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  • Mohring, Herbert

Abstract

In a "closed-economy" cost-benefit analysis of a public investment, all affected economic agents matter. In such an analysis, if price equals marginal cost in all affected markets, accurately measuring benefits requires looking only at the use made of the improvement; "non-user" costs and benefits cancel out. Only if price is unequal to marginal cost in affected markets do unduplicated net nonuser benefits and costs exist. In an "open-economy" cost-benefit analysis, gains and losses to outsiders are ignored. The nature of nonuser insider benefits, particularly from "job-creation", is discussed.

Suggested Citation

  • Mohring, Herbert, 1993. "Maximizing, measuring, and not double counting transportation-improvement benefits: A primer on closed- and open-economy cost-benefit analysis," Transportation Research Part B: Methodological, Elsevier, vol. 27(6), pages 413-424, December.
    • Handle: RePEc:eee:transb:v:27:y:1993:i:6:p:413-424
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    Cited by:

    1. Vörös, Tünde, 2018. "Methodological Challenges in Cost-Benefit Analysis," Public Finance Quarterly, Corvinus University of Budapest, vol. 63(3), pages 402-423.
    2. Mackie, Peter & Preston, John, 1998. "Twenty-one sources of error and bias in transport project appraisal," Transport Policy, Elsevier, vol. 5(1), pages 1-7, January.
    3. Lee, D. B., 2000. "Methods for evaluation of transportation projects in the USA," Transport Policy, Elsevier, vol. 7(1), pages 41-50, January.
    4. Holmgren, Johan, 2020. "The effect of public transport quality on car ownership – A source of wider benefits?," Research in Transportation Economics, Elsevier, vol. 83(C).
    5. Truong, Truong P. & Hensher, David A., 2012. "Linking discrete choice to continuous demand within the framework of a computable general equilibrium model," Transportation Research Part B: Methodological, Elsevier, vol. 46(9), pages 1177-1201.
    6. Ginés de Rus & M. Pilar Socorro & Jorge Valido & Javier Campos, 2023. "Cost–Benefit Analysis of Transport Projects: Theoretical Framework and Practical Rules," Springer Books, in: Economic Evaluation of Transport Projects, chapter 0, pages 11-42, Springer.
    7. Grimaldi, Raffaele & Beria, Paolo, 2013. "Open issues in the practice of cost benefit analysis of transport projects," MPRA Paper 53766, University Library of Munich, Germany.
    8. Jérôme Massiani, 2020. "Towards Improved Guidelines for Cost–Benefit Analysis of Sport and Cultural Events," Economic Papers, The Economic Society of Australia, vol. 39(3), pages 270-289, September.
    9. Laird, James J. & Mackie, Peter J., 2014. "Wider economic benefits of transport schemes in remote rural areas," Research in Transportation Economics, Elsevier, vol. 47(C), pages 92-102.
    10. Eliasson, Jonas & Fosgerau, Mogens, 2019. "Cost-benefit analysis of transport improvements in the presence of spillovers, matching and an income tax," Economics of Transportation, Elsevier, vol. 18(C), pages 1-9.
    11. Panina, L.V. & Mohri, K. & Uchiyama, T., 1997. "Giant magneto-impedance (GMI) in amorphous wire, single layer film and sandwich film," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 241(1), pages 429-438.
    12. Tijm, Joep & Michielsen, Thomas O. & van Maarseveen, Raoul & Zwaneveld, Peter, 2019. "How large are the non-travel time effects of urban highway tunneling? Evidence from Maastricht, the Netherlands," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 570-592.
    13. Hansen, Wiljar & Johansen, Bjørn Gjerde, 2017. "Regional repercussions of new transport infrastructure investments: An SCGE model analysis of wider economic impacts," Research in Transportation Economics, Elsevier, vol. 63(C), pages 38-49.
    14. Lakshmanan, T.R., 2011. "The broader economic consequences of transport infrastructure investments," Journal of Transport Geography, Elsevier, vol. 19(1), pages 1-12.

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