Issues on Measurement the Benefits of Improved Highway Infrastructure

  • Zilvinas Bazaras Kaunas University of Technology
  • Diana Miceviciene Kaunas University of Technology
Keywords: highway, infrastructure, costs, consumer and producer surplus

Abstract

The paper reviews the theoretical and empirical issues on the measurement of the impacts of the performance of the improved highway infrastructure. It focuses on experience with the notion of the assessment of so called direct benefits associated with the investments rather than the estimation of the indirect ones in context of so popular in practice cost-benefit analysis generating a huge literature in its own right. Raising the issues of validity of the intervention of governments into economics in terms of social justice, the concept of public alternative costs is discussed. Concluding that the inadequate usage of public resources for the formation and development of highway infrastructure may have negative consequences on the dynamics and tendencies of the development of other economic sectors, the question of an adequate, socially and economically reasonable assessment of development is raised. Despite the fact that the cost-benefit analysis is the method by which this concept of efficiency can be applied to publicly supplied good it lacks clarity. In fact, the intangible costs and benefits never enter the analysis. It is suited only for ranking courses of action designed to attain the same ends so the real benefits of decisions will be speculative and uncertain. Taking into account the complexity of the interaction the authors of the article focus on the research of the methodological framework of the evaluation of the benefits of the public in the result highway system modification. The research is based on the improvement of the simplified general equilibrium model which focuses at the price effects of direct changes in transport costs and their measurement. The research results may answer the question if the accomplishment of tasks set for the system or its parts meet the society (which uses or is a neighbor to that infrastructure )needs. Other aspects are going to be excluded from this initial investigation. The logical structure of the article was determined by the aim and the objectives of the scientific research solution sequence which is reflected in three parts. In the Introduction the topic relevance, scientific problem and level of its analysis, object, the aim, and tasks of the scientific research were presented. The methods of the research, results’ analysis, scientific novelty and significance of the work are introduced there as well. The second part of the article in dedicated to the analysis of the methodological framework of the application of general equilibrium models in measurement of the performance of improved transport systems. The possible extension of the model and its application issues are presented in the last chapter of the paper introducing the mathematical expression of the consumer and producer surpluses.

Published
2010-10-24
Section
Articles