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  M.A. Programme |  Doctoral Programme
   
  Syllabus M.A. Credit Course Electives
 
Transportation Economics - Theory and Practice
  1. Semester: III/IV
  2. Number of Credits: 4

Course Description and Objectives:
In this course, the tools of microeconomic analysis will be applied to the transport sector. We will build on theories and concepts developed in the microeconomics courses and we will show how extensions of the theory can deal with the idiosyncrasies of the transport sector. For example, the concept of “price” is generalized to include the value of time to the traveler. The demand for transporting freight is explained using the theory of the derived demand for an input. At the same time, the impact of modern approaches to management (logistics) would be considered. Just as the concept of “price” requires modification, we will see that “output” has many dimensions and explore the implications of this. In particular, we will examine the cost complexities exhibited in the transport sector and the need to modify pricing principles accordingly. The transport sector is very rich in terms of applications of concepts such as price discrimination and social cost benefit analysis. In addition, a study of transport of transport economics would also involve application of microeconomics in analysis of policies, especially in relation to appropriate ways to regulate firms. The course, in general, covers the relationship between transport and the economy. Basically, the course has been designed to apply economic concepts in a practical setting and illustrate them using case studies especially chosen from the Indian context to provide important insights into the economics and management of different parts of the transport sector.

Prerequisites: The stated prerequisites for the course are: Introduction to Microeconomics and Introduction to Macroeconomics. A reasonable background in basic Algebra and Calculus is needed.  Some of the mathematics maybe reviewed in class, if required.

Module 1: Introduction (8 hours)
Transport as a catalyst to development; measuring the impact of transport on the economy- case studies of impacts. An overview of transportation activities in India: network and performance; issues for the future. Some basic considerations: transportation and land-use, the transport planning process.

Module 2: Demand and Supply Analysis (12 hours)
Transport Demand: The Basic Framework- measuring the demand in a spatial and temporal setting. Traditional Four-Stage Demand Model;  modern approaches to modeling demand and practical issues in demand estimation. Supply: the nature of output in transport, output and costs, economies of size, density and scope, empirical estimation of transport cost functions - the approaches and illustrations.

Module 3: Market Structure and Pricing (12 hours)
The spectrum of transport market structures: market power and the scope for pursuing different strategies. Pricing Principles – First Best Rules, Ramsey Pricing – Second Best Solution, Price Discrimination, Pricing with Stochastic Demand, Road Pricing and Congestion. Pricing in practice – public transport fares, rail tariffs, pricing by shipping conferences and electronic road pricing schemes.

Module 4: Investment Decisions (8 hours)
The nature of investment decisions; financial evaluation of transport investments; social cost benefit analysis: economic evaluation of transport investments. Practical issue in evaluation and case studies of road and rail projects evaluation.

Module 5: Market Regulation and Policy (8 hours)
Theory of Regulation, Deregulation and Privatisation in Transport. Approaches to privatisation of transport infrastructure and services and a competition policy for transport.Evolution of transport policy in India with focus on case studies regarding different modes.

References
1.

McCarthy, P.S. Transportation Economics, Massachusetts: Blackwell Publishers, (2001) (All Modules)

2.

Button, K.J. Transport Economics, 2nd edition, London: Heinemann (1993) (All Modules)


Additional Readings
1.
Boyer, K.D.: Principles of Transport Economics, Massachusetts: Addison-Wesley, (1998)
2.
Cole,S.: Applied Transport Economics: Policy, Management and Decision Making, London: Kogan Page.
(1998)

3.

Winston,C.: Conceptual Developments in the Economics of Transportation: An Interpretive Survey,
Journal of Economic Literature, Vol.XXIII (March 1985), pp.57-94
 
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