Transport Flashcards
Describe the imperfect information market failure
Some of the modes of transport is so complex that it is impossible for individuals to know all relevant and important information when using transport or buying a vehicle. FE: Safety information
Why is government intervention required for public safety?
People have incentives to ensure that their car or an airplane is safe, given that their lives may depend on it.
However, the information and skills required to ensure this may be beyond most person’s abilities.
What is meant by hidden characteristics in relation to imperfect info?
Cars are complex products. Consumers consider not a single feature but a ‘bundle of characteristics’ (comfort, safety, style, social signals, etc) when purchasing a car.
Some of the characteristics is not easy to assess just by looking at the car. For example: fuel efficiency
How to address transport imperfect information?
information based policies such as road worthy certificates
Negative externalities of transport
Road and vehicle users often do not bear the full cost of their choices and decisions and hence these lead to a range of negative externalities. Examples:
Health effects (e.g. particulate emissions, airborne lead emissions)
Regional environmental effects (regional air pollutants, e.g. NO2)
Global environmental effects (climate change, GHG emissions)
Barrier to wildlife movements and migration
Noise
Accidents
Road and other infrastructure damage
What about the variables of transport makes regulation so complex?
Mobility of polluting source:
Concentration of pollution changes with the location of the vehicles (e.g. rush hours in metropolitan areas)
Large number of sources:
Monitoring and enforcement is more challenging than for other sources
Individuals have limited understanding how to reduce pollution from their cars.
What should be understood about the global impact on transport externalities?
Only depends on fuel type and quantity (not the location of emission).
No need to regulate at the individual vehicle level.
Impact is directly proportional to fuel use and can be regulated at an aggregate level (point of sale, import, refinement).
When, where and what type of car emitted it does not matter from the point of view of a global pollutant.
What should be known about the local impact of negative externalities
Policies that aim to address local or regional environmental externalities need to consider the location and/or time characteristics of the environmental problem.
Policy need to be tailored to ‘guide’ transport in a way to reduce environmental externalities at the right time and location.
What should be considered with the new fancy technology for transport policy
Is it worth it?
Technology now allows toll to reflect not only location and time but also other factors:
Weather
Vehicle type
With current technology, cost of inclusion of other variables (e.g. noise level, fuel type) may not justify complexity, cost of obtaining information, administration, etc.
The cost of technology may change in the future and may make it more affordable.
What is a differentiated vehicle tax? What is it useful for? Why is it shit
Differentiated tax treatment depending on the “environmental friendliness” of the car.
May accelerate the introduction of newer technology but the link between cost and benefit may be blurred.
Administratively simple but the policy disregards important factors such as the how much, when and where the car is driven.
Whats the cunty thing about road congestion?
Driver will consider the time it takes (in current traffic) from point A to point B but will not consider the extra time (the marginal cost) that his presence imposes on everyone else.
Marginal private costs and marginal social costs diverge as traffic increases.
Where is congestion efficient? What usually happens?
The efficient point is where marginal private benefit equal marginal social cost (Ve)
In absence of internalizing the social cost, the number of cars will increase as long as the marginal private benefit is greater than the marginal private cost (Vp)
What is the purpose of a private toll road?
To ensure that road users pay all the costs of maintaining the highways rather than transferring that burden to taxpayers
How does the Market-based transport management work in Singapore
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What inappropriate government intervention exists in transport policy? What are the example policies of these?
Several policies lead to unintended consequences or do not perform well.
do more benefit for some industry or specific industry participants than for the environment or to achieve a specific objective.
Implicit subsidies of transport
Fuel efficiency schemes
Accelerated vehicle retirement
