Dynamic Efficiency and Transportation Infrastructure Investment”

The concept of efficiency has long been applied to transportation, and was a prominent justification for the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) [emphasis added]. However, other ideals have justified transportation policy often to the detriment of efficiency. In this paper I argue that a broader view of efficiency is needed and that it should be the primary criterion in making transportation policy. This conception of efficiency developed here, dynamic efficiency, draws from transaction cost theory to incorporate institutions into the analysis and as such resolves some dilemmas posed by previous economic analysis. It also suggests an analytical method for making decisions about the design of institutional structure in this policy area. Finally it has a dynamic component which charts out a path for optimal economic development in a holistic way that integrates transportation policy with environmental, land use, and social policy. Several illustrations of how existing transportation policy could be changed to improve dynamic efficiency are given.

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 Record created 2017-04-01, last modified 2020-10-28

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