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Abstract
This paper looks at the changes that have occurred since the 1970s in the types of economic tools
used, the ways they have been used, and the impacts they have had in shaping the way we now
understand transportation. Over the past 30 years, society’s views on transport have changed
and, with this, the issues to which we attach priority have altered. Additionally, there have been
important changes in our more generic understanding of economics and this has added to the toolkit
of concepts that can be applied to transport matters. The tradition of transportation economics up
until the late 1960s was largely one of defining ‘optimal’ pricing principles in regulated markets,
in understanding market domination for mergers and similar policies, and in providing advice to
engineers dealing with investment decisions. There is now, however, an appreciation that providing
transport services is more complex than was once thought and, therefore, it is better to leave as
much as possible to market forces; but this has also happened at a time when our understanding of
markets has changed. There has additionally been the emergence of novel political and governance
structures, such as the Single European Market, that have resurrected older interests in such things
as links between economic development and transport quality. Despite this shift to the market as a
primary means of resource allocation, parallel moves have taken place to embrace more fully the
external costs of environmental damage. The advent of computers, more sophisticated econometric
and programming techniques, and the availability of new data sources, such as GIS, have facilitated
more efficient estimation of parameters and added to the quantitative contribution of economics.