Transportation Market Distortions

Abstract

Properly functioning markets efficiently allocate resources. Such markets must reflect certain principles, including consumer options, cost-based pricing, and economic neutrality. Transportation markets often violate these principles. This report examines these distortions and their implications for transport planning. Transportation market distortions include various types of underpricing of motorized travel, planning practices that favor automobile travel over other modes, and land use development practices that create automobile-dependent communities. Although these distortions may individually appear modest and justified, their impacts are cumulative and synergistic, leading to economically excessive motor vehicle use. These distortions exacerbate many problems, including traffic congestion, facility costs, accidents, reduced accessibility (particularly for non-drivers), consumer transportation costs, inefficient energy consumption, and excessive pollution. Market reforms that reduce these distor- tions would provide significant economic, social, and environmental benefits. In a more efficient market, consumers would choose to drive less, rely more on alternative transport options, and be better off overall as a result.

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