Infrastructure and Transport Economics

[562224]
Professor: Dr. Germà Bel / Dr. Xavier Fageda

Department: Economic Policy and World Economic Structure

Course 2013-2014 (4th term)

AIMS

This course aims to analyze the economics and politics of infrastructure in the
general framework of transport economics. It introduces basic elements of the
theory of demand and supply of transport, and analyzed the effect of infrastructure
on economic activity. In this context, we discuss various topics of interest as
transport policies that address the problem of congestion, privatization and
regulation of transport infrastructures, the political economy of regional allocation
of infrastructure investments and competition in passenger transport. The course
program is divided into three parts: (1) economic theory of transport, (2)
Infrastructure and economic activity, and (3) Selected topics.

EVALUATION

The evaluation of the course will be configured according to three parameters,

with corresponding weights:

1. Examination of contents of the sessions (1/3)

2. Presentation and student participation in class (1/3)

3. Practical Exercise (1/3)

Note: There are two alternative options for carrying out the practical exercise

3.1 Resolution of an econometric exercise (with Stata or E-views) consistent in

estimating demand and price equations in aviation

3.2 Development of a short essay (1500-2000 words) to conduct a discussion of a

current topic concerning transport policy
PROGRAM

1. Transport economics
1.1 Preliminary issues
1.2 Costs
1.3 Demand
1.4 Prices

2. Infrastructures and economic growth

2.1. Methological approaches: Macroeconomic, microeconomic, regional
2.2. Evaluating the impact of transport infrastructures: production function, Cost-
Benefit Analysis, Costs at the sector level.

3. Selected topics
3.1. Intermodal & intra-modal competition
3.2. Privatization and regulation
3.3. Political economy of investments
3.4. Congestion

BIBLIOGRAPHY

Section1
BUTTON, K. (2010): Transport Economics, 3rd. ed. Cheltenham, UK: Edward Elgar.
De RUS, G., J. Campos & G. NOMBELA (2003), Economía del Transporte, Barcelona:
Antoni Bosch

Section 2
ASCHAUER, D. A (1989), “Is public expenditure productive?”, Journal of Monetary
Economics, 23, 177–200.
BEL, G. y X. FAGEDA (2008), "Getting there fast: Globalization, intercontinental
flights and location of headquarters", Journal of Economic Geography, 8, 471-495
DE RUS, G. & G. NOMBELA (2007), Is Investment in High Speed Rail Socially
Profitable? Journal of Transport Economics and Policy, 41 (1), 3–23
HOLL, A. (2004), “Manufacturing location and impacts of road transport
infrastructure: empirical evidence from Spain”, Regional Science and Urban
Economics, 34, 341-363
PUGA, D. (2002), “European regional policies in light of recent location theories”,
Journal of Economic geography, 2, 373-406.
Section 3

Intermodal & intra-modal competition

BEL, G. (1997), “Changes in travel time across modes and its impact on the demand
for inter-urban rail travel”, Transportation Research, 33-E (1), 43-52.
BILOTKACH, V., FAGEDA, X., & FLORES-FILLOL, R., (2010), Scheduled service
versus personal transportation: The role of distance, Regional Science and Urban
Economics, 40 (1), 60-72
FAGEDA, X. (2006), Measuring conduct and cost parameters in the Spanish airline
market, Review of Industrial Organization, 28, 379-399
MATAS, A. (2004), Demand and Revenue implications of an integrated public
transport policy: The case of Madrid. Transport Reviews, 24(2), 195-217.
NASH, C. (2010), European rail reform and passenger services - the next steps,
Research in Transportation Economics, 29(1), 204-211.
GONZÁLEZ-SAVIGNAT, M. (2004), Competition in air transport: the case of the high
speed train, Journal of Transport Economics and Policy, 38, 77-107

Privatization and regulation

BEL, G., & X. FAGEDA (2010), “Privatization, regulation and airport pricing: An
empirical analysis for Europe”, Journal of Regulatory Economics, 37 (2), 142-161
CHEON, S.C, D.E. DOWALL & D.W. SONG (2010). “Evaluating impacts of
institutional reforms on port efficiency changes: Ownership, corporate
structure, and total factor productivity changes of world container ports”,
Transportation Research-E, 46, 546-561
ENGEL, E., FISCHER, R. & A. GALEOTOVIC (2006), “Privatizing highways in the
United States”, Review of Industrial Organization, 29 (1), 27-53
OUM, T., N. YAN, J & C.YU (2008), “Ownership forms matter for airport efficiency: A
stochastic frontier investigation of worldwide airports”, Journal of Urban
Economics, 64 (2), 422-435.

Political economy of investments

ALBALATE, D., G. BEL y X. FAGEDA (2012), Beyond the efficiency-equity dilemma:
Centralization as a determinant of government investment in infrastructure,
Papers in Regional Science, 91(3), 599-615.
BEL, G, & X. FAGEDA (2009), Preventing competition because of solidarity:
Rhetoric and reality of airport investments in Spain, Applied Economics , 41 (22),
2853-2865.
CADOT, O., L. H. ROLLER y A. STEPHAN (2006), "Contribution to Productivity or
Pork Barrel? The two Faces of Infrastructure Investment", Journal of Public
Economics, 90, 1133-1153
CASTELLS, A. y A. SOLÉ (2005), “The regional allocation of infrastructure
investment: the role of equity, efficiency and political factors”, European
Economic Review, 49, 1165–205.
DE LA FUENTE, A. (2004), Second-best Redistribution through Public Investment:
A Characterization, an Empirical Test and an Application to the Case of Spain,
Regional Science and Urban Economics, 34, 489-503.
KEMMERLING, A. y A. STEPHAN (2008), “The politico-economic determinants and
productivity effects of regional transport investment in Europe," EIB Papers
7/2008, European Investment Bank, Economics Department.

Congestion
ALBALATE, D. & G. BEL (2009). “What Local Policy Makers Should Know About
Urban Road Charging: Lessons From Worldwide Experiences”, Public
Administration Review, 69(5), 962-974.
BRUECKNER, J. (2002), “Airport congestion when carriers have market power”,
American Economic Review, 92, 5, 1357-1375
DURANTON, Gilles and Matthew A. TURNER, 2011. The Fundamental Law of Road
Congestion: Evidence from US Cities. American Economic Review, 101(6), 2616-
1652.
KING, David, Michael MANVILLE and Donald SHOUP, 2007. The political calculus of
congestion pricing, Transport Policy 14, 111-123.
MAYER, C., & SINAI, T. (2003), “Network Effects, Congestion Externalities, and Air
Traffic Delays: Or Why Not All Delays Are Evil”, The American Economic Review,
93 (4)
ROTARIS; L, R. DANIELIS, E. MARCUCCI Y J. MASSIANI (2010) “The urban road
pricing scheme to curb pollution in Milan, Italy: Description, impacts and
preliminary cost–benefit analysis assessment” Transportation Research Part A
44 (2010) 359–375
SANTOS, G. y G. FRASER (2006) Road Pricing: Lessons from London. Economic
Policy, 21 (46): 264-310
WINSTON, C. & LANGER, A. (2006), “The effect of government highway spending on
road users’ congestion costs”, Journal of Urban Economics, 60, 463–483
PAPERS TO BE DISCUSSED

BEL, G. (1997), “Changes in travel time across modes and its impact on the demand
for inter-urban rail travel”, Transportation Research, 33-E (1), 43-52.
DE RUS, G. & G. NOMBELA (2007), Is Investment in High Speed Rail Socially
Profitable? Journal of Transport Economics and Policy, 41 (1), 3–23
CADOT, O., L. H. ROLLER y A. STEPHAN (2006), "Contribution to Productivity or
Pork Barrel? The two Faces of Infrastructure Investment", Journal of Public
Economics, 90, 1133-1153
CHEON, S.C, D.E. DOWALL Y D.W. SONG (2010). “Evaluating impacts of institutional
reforms on port efficiency changes: Ownership, corporate structure, and total
factor productivity changes of world container ports”, Transportation Research-
E, 46, 546-561
HOLL, A. (2004), “Manufacturing location and impacts of road transport
infrastructure: empirical evidence from Spain”, Regional Science and Urban
Economics, 34, 341-363
KEMMERLING, A. y A. STEPHAN (2008), “The politico-economic determinants and
productivity effects of regional transport investment in Europe," EIB Papers
7/2008, European Investment Bank, Economics Department.
MAYER, C., & SINAI, T. (2003), “Network Effects, Congestion Externalities, and Air
Traffic Delays: Or Why Not All Delays Are Evil”, The American Economic Review,
93 (4)
MATAS, A. (2004), Demand and Revenue implications of an integrated public
transport policy: The case of Madrid. Transport Reviews, 24(2), 195-217.
OUM, T., N. YAN, J & C.YU (2008), “Ownership forms matter for airport efficiency: A
stochastic frontier investigation of worldwide airports”, Journal of Urban
Economics, 64 (2), 422-435.
WINSTON, C. & LANGER, A. (2006), “The effect of government highway spending on
road users’ congestion costs”, Journal of Urban Economics, 60, 463–483