Summary - TST 7
TRANSPORTES, SERVICIOS Y TELECOMUNICACIONES
María Eugénia Mata y Lara Tavares
The value of portuguese railways for consumers on the eve of the First World War
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Key words:
Railways; welfare; New Economic History.
[ Abstract ]
This paper discusses methodological approaches to the assessment of economic effects of railways. Traditionally, economic historians assess the benefits of railways through the social savings. This concept, as defined in the literature, imposes several strong hypotheses. We argue that these hypotheses are too strong, which implies that the social savings cannot be considered an accurate measure of the impact of railways. Therefore, an alternative approach for measuring this impact is proposed. Instead of using a counterfactual analysis, we decided to look at the welfare gains due to the Railway, namely the consumers’ surplus variation. In order to estimate the consumers’ surplus in 1914 we first had to estimate demand functions, which also allows calculations on passengers and freight price-elasticities. The results show that price-elasticities were low and consumers’ surplus were remarkable, making clear the effects of government economic policy on implementing transportation facilities and low pricing for users.
[ Abstract ]
This paper discusses methodological approaches to the assessment of economic effects of railways. Traditionally, economic historians assess the benefits of railways through the social savings. This concept, as defined in the literature, imposes several strong hypotheses. We argue that these hypotheses are too strong, which implies that the social savings cannot be considered an accurate measure of the impact of railways. Therefore, an alternative approach for measuring this impact is proposed. Instead of using a counterfactual analysis, we decided to look at the welfare gains due to the Railway, namely the consumers’ surplus variation. In order to estimate the consumers’ surplus in 1914 we first had to estimate demand functions, which also allows calculations on passengers and freight price-elasticities. The results show that price-elasticities were low and consumers’ surplus were remarkable, making clear the effects of government economic policy on implementing transportation facilities and low pricing for users.