Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area

Authors

Stefan Tscharaktschiew
Georg Hirte

Document Type

Journal Article

Publication Date

2012

Subject Area

place - europe, economics - subsidy, technology - emissions, land use - urban sprawl

Keywords

Urban general equilibrium model, Transport policy, Transport subsidy, Commuting subsidy

Abstract

In many countries passenger transport is significantly subsidized in a variety of ways for various reasons. The objective of this paper is to examine efficiency, distributional, environmental (CO₂ emissions) and spatial effects of increasing different kinds of passenger transport subsidies discriminating between household types, travel purposes and travel modes. The effects are calculated by applying a numerical spatial general equilibrium approach calibrated to an average German metropolitan area. In extension to most studies focusing on only one kind of subsidy, we compare the effects of different transport subsidies within the same unified framework that allows to account for two features not yet considered simultaneously in studies on transport subsidies: endogenous labor supply and location decisions. Furthermore, congestion, travel mode choice, travel related CO₂ emissions and institutional details regarding the tax system in Germany are taken into account. The results suggest that optimal subsidy levels are either small or even zero. While subsidizing public transport is welfare enhancing, subsidies to urban road traffic reduce aggregate urban welfare. Concerning the latter it is shown that making investments in urban road infrastructure capacity or reducing gasoline taxes may even be harmful to residents using predominantly automobile. In contrast, pure commuting subsidies hardly affect aggregate urban welfare, but distributional effects are substantial. All policies cause suburbanization of city residents and (except for subsidizing public transport) contribute to urban sprawl by raising the spatial imbalance of residences and jobs but the effect is relatively small. In addition, the policies induce a very differentiated pattern regarding distributional effects, benefits of landowners and environmental effects.

Rights

Permission to publish the abstract has been given by Elsevier, copyright remains with them.

Comments

Transportation Research Part A Home Page:

http://www.sciencedirect.com/science/journal/09658564

Recommended Citation

Tscharaktschiew, S., & Hirte, G. (2012). Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area. Transportation Research Part A: Policy and Practice, Vol. 46, (2), pp. 285-309.