Transport economics
Transport economics is a branch of economics founded in 1959 by American economist John R. Meyer that deals with the allocation of resources within the transport sector. It has strong links to civil engineering. Transport economics differs from some other branches of economics in that the assumption of a spaceless, instantaneous economy does not hold. People and goods flow over networks at certain speeds. Demands peak. Advance ticket purchase is often induced by lower fares. The networks themselves may or may not be competitive. A single trip (the final good, in the consumer's eyes) may require the bundling of services provided by several firms, agencies and modes.
Although transport systems follow the same supply and demand theory as other industries, the complications of network effects and choices between dissimilar goods (e.g. car and bus travel) make estimating the demand for transportation facilities difficult. The development of models to estimate the likely choices between the goods involved in transport decisions (discrete choice models) led to the development of an important branch of econometrics, as well as a Nobel Prize for Daniel McFadden.
In transport, demand can be measured in number of journeys made or in total distance traveled across all journeys (e.g. passenger-kilometers for public transport or vehicle-kilometers of travel (VKT) for private transport). Supply is considered to be a measure of capacity. The price of the good (travel) is measured using the generalised cost of travel, which includes both money and time expenditure.
The effect of increases in supply (i.e. capacity) are of particular interest in transport economics (see induced demand), as the potential environmental consequences are significant (see externalities below).
Beyond the analysis of the demand, supply, and pricing of transport, transport economics is increasingly concerned with the wider spatial and economic impacts of transport systems. Transport networks are important in shaping the urban form and regional economic structures, as they affect the accessibility, land-use patterns, and location of firms and households. Well-connected cities and regions are generally more prone to economic activity and productivity, while locations with poor accessibility to transport can be constrained in terms of growth and access to the labour market .
From an urban economics perspective, transportation infrastructure impacts commuting patterns, residential density, and employment spatial distribution. Improvements in transport connectivity can lead to expanding effective labour markets by reducing travel time, as this facilitates firms to tap into larger pools of workers and also facilitates agglomeration economies in metropolitan areas. At the regional level, transport investments affect interregional trade, specialization and economic convergence or divergence, so transport economics is an important part of the analysis of regional development .
Technological change has led to the further expansion of the scope of transport economics. Developments like autonomous cars, smart transport systems and digital mobility platforms have the promise to change the dynamics of congestion, the efficiency of networks and accessibility. These innovations may change commuting behaviour and logistics systems and have implications for land use, infrastructure investment and spatial organisation of cities and regions .
Equity and accessibility are also key issues in transport economics today. Transportation policies and investments can have uneven effects in different neighborhoods, income groups, and regions, affecting access to employment, education, and necessary services. Economic analysis is increasingly being used to understand the distributional impacts of transport systems and to provide inputs into policies intended to reduce spatial and social inequalities within and between urban regions .. Recent global disruptions such as the pandemic of corona virus (COVID-19) have resulted in making more apparent the sensitivity of transport demand to economic shocks and behavioral change. Shifts in work patterns towards remote work, travel patterns and disruptions to supply chains have renewed interest in the ways in which transport systems adapt to changing economic conditions and how these adaptations may have lasting effects on urban and regional economies .