A properly functioning market is usually the most efficient way to allocate resources. Such a market must reflect certain principles, including consumer choice, competition, optimal pricing and economic neutrality. Transportation markets often violate these principles. This report identifies transportation market distortions. Major distortions include planning and funding practices that favour automobile travel, transportation underpricing, limited transportation choices, impacts motorized traffic imposes on other modes, and land use policies that favour low-density development. Although individually their impacts may appear modest and justified they have significant cumulative effects, leading to excessive vehicle use, automobile dependency, and inefficient land use. These distortions exacerbate a number of problems, including traffic congestion, facility costs, accidents, limited travel choices (particularly for non-drivers), pollution and inefficient land use. In a less distorted transportation market consumers would probably drive significantly less, and be better off overall as a result. Transportation market distortions tend to favour higher-income motorists, while harming people who cannot drive, lower annual mileage drivers, and people who value having diverse travel choices. Market reforms that reduce these distortions can provide significant economic, social and environmental benefits. (A)
Abstract