Decomposing generalized transport costs using index numbers: A geographical analysis of economic and infrastructure fundamentals

José Zofío, Ana Condeço-Melhorado (), Andrés Maroto-Sánchez and Javier Gutiérrez
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Javier Gutiérrez: Departamento de Geografía Humana, Universidad Complutense de Madrid

No 2011/06, Working Papers in Economic Theory from Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History)

Abstract: We use the economic theory approach to index numbers in order to improve the existing definitions and decompositions of generalized transport costs (GTCs), and thus to obtain a better understanding of their economic and infrastructure determinants. Using this approach we accurately measure the contribution made to reducing GTCs by the variation in operating costs and accessibility variables, and discuss to what extent transportation policy has been successful in reducing GTCs in terms of market competition and infrastructure investments. To implement the optimizing behaviour of transportation firms when choosing minimum cost itineraries, we compile a new economic database on road freight transportation at a highly detailed provincial level, which is then embedded into a GIS to show the digitalized road networks corresponding to five-year intervals between 1980 and 2007. Average GTCs weighted by trade flows have decreased by -16.3% in Spain, with infrastructure policy leading the way in providing notable accessibility improvements in terms of lower times and distances. The contribution of infrastructure is double that of economic cost, whose trends are mainly driven by technological and market determinants rather than by specific competition and regulatory policies promoted by the administrations. We find large territorial disparities in GTC levels and variations, but also significant clusters where the market and network effects on GTC reduction show relevant and diverse degrees of spatial association. We finally conclude that after three decades of active transportation policy aimed mainly at intensifying investment in road infrastructure, there has been a significant increase in territorial cohesion in terms of GTCs and their components.

Keywords: Generalized transport costs; Index number theory; Infrastructure; GIS; Territorial cohesion. (search for similar items in EconPapers)
JEL-codes: C43 H54 L92 R58 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2011-11
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (1)

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