The objective of the paper is to outline a state-of-the-art model framework to handle freight trans-port as an integrated economic activity. This involves a model with the ability to explain causal economic relationships, e.g. the relationship between the supply and demand side of the economy and corresponding prices. The model layout is of the spatial computable general equilibrium (SCGE) type with separate freight transport sectors, regional trade, mobile capital formation, and elastic labour supply due to substitution effects between the time spent on leisure and work. The model represents an important contribution in especially two respects. At the theoretical level, the model represents a very flexible integration of transport, which make it possible to trace how the combination of sectorial and regional effects interact and dissolves throughout the regional economy. The explicit representation of space also makes it possible to recycle tax revenues at the regional level. At the practical level, the model represents a fully calibrated SCGE model. The theoretical framework is applied to a road pricing experiment in which, production of transport is endogenous with labour and capital as factor inputs. Transport costs are dependent on the distance between zones. One result from the experiment is that road pricing induce increasing prices on intermediate goods and increasing demand for labour and capital. At the regional level, effects depend on the calibrated regional production functions. In the experiment, significant regional and sectorial effects are ob served. The overall welfare results depend on how the tax revenue is redistributed in the regional economy. Different scenarios are presented. For the covering abstract please see ITRD E135207.
Abstract