Chapter 4: Equity versus Efficiency in Transport Systems

Most textbooks on welfare economics see the issue of equity as being a central issue (e.g., Johanson, 1991). However, this issue is less often explicitly recognized when it comes to applied studies of transport economic issues. Yet it is clearly a central feature of many debates over transport pricing and investment decisions.

In this chapter we will first discuss the two concepts of efficiency and equity, and then consider their application to transport pricing and appraisal decisions. We will then consider explicitly the concept of social exclusion and its relevance for transport decisions before reaching our conclusions.

Before discussing the conflicts between equity and efficiency in the transport sector, it is necessary to clarify these concepts. To do so it is necessary to introduce a little economics. For those with an economic background, this section will be very straightforward, but for others it is important to make the effort to understand these principles.