Welfare effects of a transport subsidy in a spatial price equilibrium

Arbeitspapier

The paper shows that in a spatial price equilibrium under monopolisitc competition welfare can be increased by subsidising transport. Therefore transport can be said to exert a positive (pecuniary) externality. This is demonstrated by introducing a subsidy into a partial spatial price equilibrium of the Hotelling-Smithies type in one-dimensional space. Two varieties of demand are analysed, linear and negative exponential. The welfare effect of a transport subsidy is shown to be decomposable into three effects, the expansion effect, the competition effect and the market size effect. Numerical results and decompositions are presented.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Diskussionsbeiträge aus dem Institut für Wirtschaft und Verkehr ; No. 3/98

Classification and Topics

• Classification: Wirtschaft
• Subject: transport ; externality ; spatial price equilibrium ; welfare.

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bröcker, Johannes
• Event: Veröffentlichung
• (who): Technische Universität Dresden, Fakultät Verkehrswissenschaften
• (where): Dresden
• (when): 1998

Further information

• Handle: http://hdl.handle.net/10419/48506
• Last update: 10.03.2025, 11:42 AM CET