Traditional evaluation of highway investment plans focus on measured benefits weighed against costs, with travel time saved being the primary measure of benefit. This benchmark makes intuitive sense but in practice it can lead to a bias towards areas with already high concentrations of infrastructure and economic activity and away from those with low development and transport availability. This paper will take a different approach, developing a conceptual approach that, rather than focus merely on traditional benefit and cost measures that focus on partial returns, uses a framework of assessing changes in economic equilibrium which are caused by proposed investment plans, a much more general measure of impact. In fact it will be argued that traditional measures often miss, negatively and positively, impacts that an equilibrium approach will capture and thus bias investment decisions, especially those for large scale projects. One equilibrium state that may often apply in large scale investment plans, is the so-called Nash Equilibrium. Instead of treating highway investments as situations where agents react to exogenous prices ("dead variables"), their decisions can be treated as strategic reactions to other agents’ actions ("live variables”) and, in the Nash case, agents do better to come up jointly with cooperative solutions rather than independently arrive at competitive solutions which will be ultimately suboptimal. The Nash case will be preliminarily assessed with respect to the EU Corridor 8, which runs through Southern Italy into the Balkans.

Incorporating Strategic Behavior into Transport Investment Planning Analysis: Theory and the Example of European Union Corridor 8

COLONNA, Pasquale;
2008

Abstract

Traditional evaluation of highway investment plans focus on measured benefits weighed against costs, with travel time saved being the primary measure of benefit. This benchmark makes intuitive sense but in practice it can lead to a bias towards areas with already high concentrations of infrastructure and economic activity and away from those with low development and transport availability. This paper will take a different approach, developing a conceptual approach that, rather than focus merely on traditional benefit and cost measures that focus on partial returns, uses a framework of assessing changes in economic equilibrium which are caused by proposed investment plans, a much more general measure of impact. In fact it will be argued that traditional measures often miss, negatively and positively, impacts that an equilibrium approach will capture and thus bias investment decisions, especially those for large scale projects. One equilibrium state that may often apply in large scale investment plans, is the so-called Nash Equilibrium. Instead of treating highway investments as situations where agents react to exogenous prices ("dead variables"), their decisions can be treated as strategic reactions to other agents’ actions ("live variables”) and, in the Nash case, agents do better to come up jointly with cooperative solutions rather than independently arrive at competitive solutions which will be ultimately suboptimal. The Nash case will be preliminarily assessed with respect to the EU Corridor 8, which runs through Southern Italy into the Balkans.
87° TRB Annual Meeting
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11589/17833
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