5.2 Effects of transport costs on prices and costs, with and without externalities
In this section the results of the changes in transport costs on costs and prices are presented.
First the results of a calculation without externality effects are shown in table 3a. Then the
consequences of including pecuniary externalities (table 3b) and urban externalities (table 3c)
are presented.
The analyses, which do not include externality effects, begin in the interaction components
of the cost price circle shown in figure 5. Starting with the demand for commodities at the
place of commodity market the prices on commodities increase in total by 0.05% (column 8),
distributed regionally as indicated in the table. Prices increase most in rural areas of the
country, whilst prices actually decline in Greater Copenhagen because of declining
congestion.
Given the point at which the analysis commences, the presentation follows the cost-price
circle: private consumption at the place of commodity market (column 9) and private
consumption at the place of residence (column 10). Price increases are still moderate at the
place of commodity market (at national level 0.04%), but markedly higher at the place of
residence (at national level 0.42). This reflects the fact, that impact from cost increases on
cars in trade is limited, because most transport on intra- and interregional trade typically is on
lorry. But for the shopping the transport cost increases from road pricing on cars are much
higher, because private cars are used much more frequent.
Looking at intermediate consumption price increases are again moderate (column 2)
reflecting the fact that most transportation related to intermediate consumption is on lorry,
both in trade and in shopping (intermediate consumption from the wholesaling to the place of
production). Therefore the impact on the gross output deflator (column 3) and in turn on
foreign export (column 5) are low. The regional distribution of changes in costs and prices are
similar, for each column/regional economic variable, reflecting the fact that the direct impact
of changes in transport costs reflect the decreasing costs and prices in urban areas and
increases in rural areas.
Now, looking at the impacts from externalities these are generated in a completely
different way (see table 3b and 3c): Here the impacts originate from changes in the Gross
Value Added deflator (column 1) and then commence through the cost-price circle (column 2-
10). Here the consequences for the price of production of all type of commodities are
influenced through the wage impact. GVA In the case of pecuniary externalities (table 3b,
column 1) GVA-deflator increases with 0.21% at the national level but only with 0.03% in the
case of urban externalities (table 3c, column 1). The regional pattern follows the one from
changes in transport costs (table 2). As a consequence all prices change accordingly. In this
case there is no difference between the impacts on private consumption at the place of
commodity market and the place of residence.
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