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| Title: | | Welfare effects of a transport subsidy in a spatial price equilibrium  |
| Authors: | | Bröcker, Johannes |
| Issue Date: | | 1998 |
| Series/Report no.: | | Diskussionsbeiträge aus dem Institut für Wirtschaft und Verkehr 3/98 |
| Abstract: | | The paper shows that in a spatial price equilibrium under monopolisitc competition welfare can be increased by subsidising transport. Therefore transport can be said to exert a positive (pecuniary) externality. This is demonstrated by introducing a subsidy into a partial spatial price equilibrium of the Hotelling-Smithies type in one-dimensional space. Two varieties of demand are analysed, linear and negative exponential. The welfare effect of a transport subsidy is shown to be decomposable into three effects, the expansion effect, the competition effect and the market size effect. Numerical results and decompositions are presented. |
| Subjects: | | transport externality spatial price equilibrium welfare. |
| Document Type: | | Working Paper |
| Appears in Collections: | | Diskussionsbeiträge aus dem Institut für Wirtschaft und Verkehr, TU Dresden
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