Congestion of Transport Infrastructure

A classic example of externality is the one generated by a surplus of transport demand –given by the aggregation of individual choices- as compared to the infrastructure capacity – stiff by definition.
The marginal external costs of congestion are due to the fact that the vehicle manager takes into account only its transport cost function (private cost) and doesn’t consider the costs generated by its decisions that fall on third parties. These external costs depend from the traffic intensity in the given time of use of the infrastructure and from the relative contribute given by its vehicle to infrastructure occupancy. Decisions on time of use and on the vehicle type used influence the external costs of congestion.
The main impact pathways associated to congestion are:

  • the economic damages linked to the loss of time suffered by the goods transported and by individuals related to vehicle users (friends, parents, colleagues, etc.);
  • greater vehicle operation costs;
  • costs of the greater pollution due to congestion;
  • costs of the greater accident risk linked to congestion;
  • the individual disamenity costs (stress).

Some valuators believe that the costs of congestion are internal costs. With such an assumption, coherent with the approach of the “users club”, the cost of the time delays falls totally on the transport users, with no effects outside the club. However, given the above list of impact pathways it’s obvious that the users club is a simplified approach. As to the transport of goods, the time delays due to congestion fall not only on the transport operator but –through the economic impacts chain- on the final goods costs, on competitiveness of the various sectors impaired and on the economy performance as a whole (effects on macroeconomic indicators). As to passenger transport, delays of passengers affect society through the social relation system (delays in arriving at workplace, delays in dates, loss of social relationships, etc.). The congestion responsibilities of the various vehicle models may be quite different due to their space occupancy rate. It’s not fair to assume that congestion is a “structural” externality, independent from the individual decision making. Just think about to the space occupancy differences between motorcycles and two seats cars on one side and big size cars and lorries on the other side. Congestion external costs must be valuated at the vehicle level because car design and consumer demand need to be managed due to the increasing excess as compared to infrastructure limits. .

© 2006 - Andrea Molocchi