Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/48506
Authors: 
Bröcker, Johannes
Year of Publication: 
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

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