IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v18y2011i1p76-84.html
   My bibliography  Save this article

Evaluating transport user benefits and social surplus in a transport market--The case of the Norwegian ferries

Author

Listed:
  • Jørgensen, Finn
  • Mathisen, Terje Andreas
  • Larsen, Berner

Abstract

The article first infers how consumer surplus in a market is linked to revenue under different assumptions about fare elasticity and when using different types of demand functions. This information is added to producer surplus in order to derive social surplus. The method, thus, produces a simple approach for authorities to assess social surplus in a market and its benefits to the users. A modified exponential demand function is applied to calculate consumer surplus and social surplus for 97 ferry services in Norway regulated by the state. The calculations are based on empirical data concerning ferry fare, revenue data at service level and reasonable assumptions about fare point elasticity for services covering different distances. In 2007, these services generated welfare for the users (consumer surplus) and the society (social surplus) amounting to about 5.8 billion NOK and 4.3 billion NOK, respectively. Consumer surplus and social surplus varied considerably amongst the services. Only 3 of the 97 services operate with positive profits and, hence, without subsidies. About 21 of the services contribute negatively to social surplus. Many of these unprofitable services are the only transport alternatives in rural areas and could be argued to continue operation according to politically decided regional measures. Implicitly, maintaining all these 21 services means that the welfare for the people in these areas is valued as up to four times greater than the welfare of the people in the rest of society.

Suggested Citation

  • Jørgensen, Finn & Mathisen, Terje Andreas & Larsen, Berner, 2011. "Evaluating transport user benefits and social surplus in a transport market--The case of the Norwegian ferries," Transport Policy, Elsevier, vol. 18(1), pages 76-84, January.
    • Handle: RePEc:eee:trapol:v:18:y:2011:i:1:p:76-84
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967-070X(10)00079-X
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Finn Jørgensen & John Preston, 2007. "The Relationship Between Fare and Travel Distance," Journal of Transport Economics and Policy, University of Bath, vol. 41(3), pages 451-468, September.
    2. Chang, Justin S., 2010. "Estimation of option and non-use values for intercity passenger rail services," Journal of Transport Geography, Elsevier, vol. 18(2), pages 259-265.
    3. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-597, September.
    4. Finn Jorgensen & John Preston, 2009. "The Relationship Between Fare Elasticity And Trip Length – Some Comments," Articles, International Journal of Transport Economics, vol. 36(3).
    5. Jørgensen, Finn & Pedersen, Hassa & Solvoll, Gisle, 2004. "Ramsey pricing in practice: the case of the Norwegian ferries," Transport Policy, Elsevier, vol. 11(3), pages 205-214, July.
    6. Odeck, James & Bråthen, Svein, 2008. "Travel demand elasticities and users attitudes: A case study of Norwegian toll projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(1), pages 77-94, January.
    7. Laird, James & Geurs, Karst & Nash, Chris, 2009. "Option and non-use values and rail project appraisal," Transport Policy, Elsevier, vol. 16(4), pages 173-182, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Odeck, James & Høyem, Harald, 2021. "The impact of competitive tendering on operational costs and market concentration in public transport: The Norwegian car ferry services," Research in Transportation Economics, Elsevier, vol. 90(C).
    2. Solvoll, Gisle & Hanssen, Thor-Erik Sandberg, 2018. "Importance of aviation in higher education," Journal of Air Transport Management, Elsevier, vol. 72(C), pages 47-55.
    3. Jørgensen, Finn & Solvoll, Gisle, 2018. "Determining optimal frequency at ferry crossings," Transport Policy, Elsevier, vol. 63(C), pages 200-208.
    4. Sandberg Hanssen, Thor-Erik & Larsen, Berner, 2020. "The influence of waiting time on the value of headway time on a ferry service in Norway," Research in Transportation Economics, Elsevier, vol. 82(C).
    5. Tsoi, Ka Ho & Loo, Becky P.Y., 2021. "Cutting the loss: International benchmarking of a sustainable ferry business model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 145(C), pages 167-188.
    6. Rojo, Marta & dell’Olio, Luigi & Gonzalo-Orden, Hernán & Ibeas, Ángel, 2015. "Inclusion of quality criteria in public bus service contracts in metropolitan areas," Transport Policy, Elsevier, vol. 42(C), pages 52-63.
    7. Fenling Feng & Tianzuo Zhang & Chengguang Liu & Lifeng Fan, 2020. "China Railway Express Subsidy Model Based on Game Theory under “the Belt and Road” Initiative," Sustainability, MDPI, vol. 12(5), pages 1-16, March.
    8. Škurić, Maja & Maraš, Vladislav & Davidović, Tatjana & Radonjić, Aleksandar, 2021. "Optimal allocating and sizing of passenger ferry fleet in maritime transport," Research in Transportation Economics, Elsevier, vol. 90(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Drevs, Florian & Tscheulin, Dieter K. & Lindenmeier, Jörg & Renner, Simone, 2014. "Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 250-261.
    2. Krzysztof Grzelec & Aleksander Jagiełło, 2020. "The Effects of the Selective Enlargement of Fare-Free Public Transport," Sustainability, MDPI, vol. 12(16), pages 1-18, August.
    3. del Mar Parra López, María & Annema, Jan Anne & van Wee, Bert, 2022. "The added value of having multiple options to travel to. An explorative study," Journal of Transport Geography, Elsevier, vol. 98(C).
    4. Xun Zheng & Tomio Miwa, 2019. "A Comparative Analysis on Residents’ Reservation Willingness for Bus Service Based on Option Price," Sustainability, MDPI, vol. 11(1), pages 1-12, January.
    5. Clark, Derek John & Jørgensen, Finn & Mathisen, Terje Andreas, 2014. "Competition in complementary transport services," Transportation Research Part B: Methodological, Elsevier, vol. 60(C), pages 146-159.
    6. Lee, Sunghoon & Burris, Mark W., 2018. "Estimating the Option Value of managed lanes," Research in Transportation Economics, Elsevier, vol. 70(C), pages 28-36.
    7. Jørgensen, Finn & Santos, Georgina, 2014. "Charges on transport – To what extent are they passed on to users?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 183-195.
    8. Clark, Derek J. & Jørgensen, Finn & Mathisen, Terje Andreas, 2011. "Relationships between fares, trip length and market competition," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(7), pages 611-624, August.
    9. Parry, Ian W.H., 2008. "How should heavy-duty trucks be taxed?," Journal of Urban Economics, Elsevier, vol. 63(2), pages 651-668, March.
    10. Kilmer, Richard L. & Armbruster, Walter J., 1984. "Methods For Evaluating Economic Efficiency In Agricultural Marketing," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 16(1), pages 1-9, July.
    11. Parry Ian W. H. & West Sarah E & Laxminarayan Ramanan, 2009. "Fiscal and Externality Rationales for Alcohol Policies," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-48, July.
    12. Meland, Solveig & Tretvik, Terje & Welde, Morten, 2010. "The effects of removing the Trondheim toll cordon," Transport Policy, Elsevier, vol. 17(6), pages 475-485, November.
    13. W. Michael Hanemann, 2003. "Willingness To Pay and Willingness To Accept: How Much Can They Differ? Reply," American Economic Review, American Economic Association, vol. 93(1), pages 464-464, March.
    14. Lepinteur, Anthony & Waltl, Sofie R., 2020. "Tracking Owners' Sentiments: Subjective Home Values, Expectations and House Price Dynamics," Department of Economics Working Paper Series 299, WU Vienna University of Economics and Business.
    15. Borhan, Muhamad Nazri & Ibrahim, Ahmad Nazrul Hakimi & Miskeen, Manssour A. Abdulasalm, 2019. "Extending the theory of planned behaviour to predict the intention to take the new high-speed rail for intercity travel in Libya: Assessment of the influence of novelty seeking, trust and external inf," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 373-384.
    16. Tonin, Stefania, 2018. "Citizens’ perspectives on marine protected areas as a governance strategy to effectively preserve marine ecosystem services and biodiversity," Ecosystem Services, Elsevier, vol. 34(PB), pages 189-200.
    17. Arndt, Channing & Schiller, Rico & Tarp, Finn, 2001. "Grain transport and rural credit in Mozambique: solving the space-time problem," Agricultural Economics, Blackwell, vol. 25(1), pages 59-70, June.
    18. Richard T. Carson & Miko_aj Czajkowski, 2014. "The discrete choice experiment approach to environmental contingent valuation," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 9, pages 202-235, Edward Elgar Publishing.
    19. McVey, Marty Jay, 1996. "Valuing quality differentiated grains from a total logistics perspective," ISU General Staff Papers 1996010108000012326, Iowa State University, Department of Economics.
    20. Salayo, Nerissa D., 2000. "Investment Opportunities for the Shrimp Processing Industry in the Philippines: Results from a Hedonic Analysis," Discussion Papers DP 2000-12, Philippine Institute for Development Studies.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:18:y:2011:i:1:p:76-84. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.