We analyse the problem of split incentives between Air Navigation Service Providers (ANSP) and airlines in adopting disruptive technologies. We develop a theoretical model allowing us to analyse the uptake of technologies based on the potential efficiency gains of both the ANSP and the airlines. Next, we illustrate this model numerically. Our first, intuitive, result is that while regulation of navigation fees is necessary, it also hinders the investments in new technologies. Secondly, we see that the uptake of technologies would be faster in a one-to-one setting. Thirdly, it is not certain that increased competition between ANSPs will stimulate innovation. Finally, an overall technological mandate can be welfare improving as it reduces uncertainty.

This paper assesses the economic justification for the selection of priority projects defined under the auspices of the Trans-European transport network. Three different transport models are used to analyse the costs and benefits associated with the current list of 30 priority projects. Most of these projects fail the cost-benefit test and few of the economically justifiable projects would need European subsidies to ensure their viability. Two remedies are proposed to minimise the inefficiencies surrounding project selection. The first remedy would oblige each member state or group of states to perform a cost-benefit analysis, followed by peer review and ensure that the results were published publicly prior to the ranking of federally funded priority projects. The second remedy would require federal funding to be made available only for projects with important spillovers to other countries in order to avoid pork barrel political behaviour.

In this deliverable we propose a unified and integrated framework to evaluate policies in UrbanSim and propose a set of policies that can be applied on three case studies, Paris, Zurich and Brussels. We start with a survey of the literature on sustainability from an economists‘ perspective which can be quite different from other disciplines and highlight the implications of sustainability on a city level. In section 4 we describe the social welfare function which will be used to evaluate the policies and give an overview how this has been implemented in UrbanSim. Next we survey different sustainability policies. In the last section we review what we can expect from the selection of policies in the case studies that are assessed with UrbanSim.

A federal government tries to force local governments to implement welfare optimal tolling and investment. Welfare optimal tolling requires charging for marginal external costs. Local governments have an incentive to charge more than the marginal social cost whenever there is transit traffic. We analyse the pricing and investment issue in an asymmetric information setting where the local governments have better information than the federal government. The case of air pollution and of congestion are discussed.

This paper explores reforms of pricing of private and public transport in Paris. Paris has used a policy of very low public transport prices and no road pricing. The Paris transport network is represented as a stylized concentric city with the choice between car, rapid rail, metro and buses as well as two income classes and different transport motives. The model is used to test what the efficiency gains are of introducing road pricing and of increasing public transit prices in the peak. Are both reforms re-enforcing each other or are they largely substitutes? We find that a zonal pricing scheme for the center of Paris combined with higher public transport fares in the peak perform best. The benefits of an overall capacity extension of public transport supply are much lower than the benefits of pricing reforms and could very well not pass the cost benefit test.

This paper offers a simplified model in which an agency is in charge of investing in road capacity and maintain it but cannot use the capital market so that the only sources of funds are the toll revenues. We refer to this requirement as the ’strict self-financing constraint’ to distinguish it from the traditional form for self-financing that allows borrowing from the capital market. Two small test problems are analysed: the one link problem and the problem of two parallel links with one link untolled. The numerical illustrations show the cost of the strict self-financing constraint as a function of the importance of the initial infrastructure stock, the rate of growth of demand, the price elasticity of demand and the flexibility in the pricing instruments.

The trans-European transport network (TEN-T) encompasses the major planned transport infrastructure in Europe, ranging from high speed rail to port infrastructure. Projects in this category are considered priority projects and receive European subsidies; but these have been insufficient to get these projects off the ground. This paper addresses two research questions. First, it sketches the basic economics of cross-boundary infrastructure projects: what pricing and investment policies can we expect, what is the role of through traffic and high fixed costs of infrastructure? Second, it examines briefly what lessons the EU could draw from the experience of other existing federal funding institutions like the US and Germany. These ideas are used to propose a new subsidy scheme for the TEN-T projects. (C) 2010 Elsevier Ltd. All rights reserved.

This paper presents a multi-purpose tool to assess transport investments in congestible facilities. The model can handle any combination of passenger and freight transport modes in a simplified network. Within each mode, there can be competing operators. It is calibrated to a given traffic forecast and can be used to assess the benefits and costs of combinations of strategic pricing behavior and investment. The use of the model is illustrated with examples.

This paper assesses the Oosterweel junction, a new tunnel under the river Scheldt, that aims to alleviate the congestion on the existing tunnels and on the Ring of Antwerp. The paper uses data from existing studies of the same project to calibrate a simple network model (MOLINO-II). The model is then used to compare alternatives with and without the new tunnel. The alternatives include different combinations of tolls and bans on trucks. The study concludes that the first priority is not to build new capacity but to remove the pricing distortions on the existing capacity. The alternatives that include a pricing reform are the only ones that generate a positive net benefit, almost all scenarios that include the new tunnel have a negative net benefit.

In transportation planning there can be long lead times to adapt capacity. This paper addresses two questions. First, in a one mode world (say rail or road), what is the optimal capacity choice when faced with uncertain demand, long lead times and congestion. Using a simple analytical model it is shown that when demand is inelastic, it is socially optimal to invest more than if only the expected level of demand is taken into account. In this case it may be beneficial to over invest in capacity because congestion costs are a convex function of relative use. This result holds with or without optimal tolling. The second question deals with two competing modes and where only one mode has long lead times for capacity while the other has flexible capacity. This is typical for the competition between High Speed Rail and air for the medium distance trips (500 to 1000 km), or for the competition between inland waterways and trucks for freight. We find that over investment is less justified because the substitute mode can more easily absorb the high demand outcomes.

Cost–benefit analysis plays a central role in planning and investment decisions related to transportation. Yet it is often difficult for an outsider to control and check this process. A new engineering–economics-based tool, MOLINO-II, is proposed here to perform cost–benefit analysis of transport projects and regulations in a network and multiperiod context. MOLINO-II performs cost–benefit analysis for different transport modes and types of freight and passenger traffic, peak and off-peak time periods, diverse market structures, and various financing schemes. Congestion levels and tolls are computed endogenously. MOLINO-II also takes into account uncertainty in demand and cost parameters.

Cost–benefit analysis plays a central role in planning and investment decisions related to transportation. Yet, this process is often rather obscure and difficult to control and check by an outsider. We propose here a new engineering-economic-based tool, MOLINO, to perform cost benefit analysis of transport projects and regulations in a network and multi-period context. MOLINO performs cost–benefit analysis for different transport modes and types of freight and/or passenger traffic, peak and off-peak time periods, diverse market structures (private or public monopoly or duopoly, regulated or unregulated) and various financing schemes. Congestion levels are computed endogenously. MOLINO computes costs and benefits over multiple periods and the length of the time horizon is flexible. Outputs include equilibrium values of user and social benefits, financial flows and measures of effectiveness such as congestion delays.