Modelling Transport in an Interregional General Equilibrium Model with Externalities



Abstract

In this working paper the regional impacts of road pricing on cars are analysed taking into
account externality effects from transportation on wages and productivity. In the paper the
direct impacts from changes in transport costs on level of wages and productivity (=direct
externality effects) have been estimated.

The direct and derived impacts of road pricing have been analysed with AKF’s local
economic model LINE and include the impacts on regional production, income and
employment. LINE is an interregional general equilibrium model, which uses an interregional
social accounting matrix (SAM-K) and a regional transport satellite account as the basis for
modelling. Additionally, data from a GIS-system (Technical University of Copenhagen) on
transport costs have been included to estimate the demand for transport commodities and
increase in transport demand and costs due to road pricing.

The direct effects on level of wages and productivity have been included into the model
together with all the direct effects on commodity prices from road pricing. In the working
paper the total impacts of road pricing have been subdivided into 2 components: 1) The wage
effects of reducing income net of commuting of increasing transport cost by introduction of
road pricing, 2) the labour contraction effect from increasing wages through increase in
commuting cost and 3) the negative productivity effects of introducing road pricing.

In total the impacts of road pricing are substantial. Regions with high level of average
commuting cost (suburban areas in Greater Copenhagen) suffers most, whereas the centre of
Copenhagen suffers least because of short commuting distances. In rural areas impacts are on
or just below average because low level of road pricing.



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