Cost–Benefit Analysis of Transport Policies: An Application to Subsidies in Air Transport Markets

Ginés de Rus, M. Pilar Socorro, Jorge Valido () and Javier Campos
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Jorge Valido: University of Las Palmas de Gran Canaria

Chapter Chapter 5 in Economic Evaluation of Transport Projects, 2023, pp 83-112 from Springer

Abstract: Abstract In this chapter, we use the cost-benefit analysis (CBA) to evaluate subsidies in transport markets. The CBA of any public intervention requires the comparison of the situations with and without intervention, identifying winners and losers, and carefully analysing the key parameters that would allow the public policy to induce the desired effects in the market. In particular, we focus on subsidies for resident passengers in air transport markets. We prove that the effectiveness of the subsidy strongly depends on the particular characteristics of the route, such as the level of competition, the proportion of residents, or the shape of residents’ and non-residents’ demand functions. Thus, any evaluation of the effects of such subsidies has to be performed route by route, taking into account the particular characteristics of the route, the market share of residents and non-residents, and the degree of competition.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-35959-0_5

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DOI: 10.1007/978-3-031-35959-0_5

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