Reply to Critics of Transportation Costing

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Victoria Transport Policy Institute, 1996 - Transportation - 24 pages
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Recent studies identify significant external costs from motor vehicle use. In response, various automobile industry supported organizations (called Critics in this paper) have published reports attacking these studies. These Critics argue that many transportation costs do not exist or are not externalities, and that changing prices to internalize costs would be inappropriate. This paper critiques these reports. Several analytic weaknesses are identified. The Critics misinterpret the concepts of costs and externalities, ignore marginal analysis, assume that uncertain costs have zero value, claim undemonstrated external benefits, miscalculate tax revenues, omit significance cost categories, and many cases are simply incorrect in their facts. They claim to analyse externalities of automobile use when they actually consider subsidies between drivers and non-drivers. Externalities and subsidies are different economic concepts, but the Critics use them interchangeably and selectively to support their arguments.

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