Introduction

Transportation Economics is defined as the study of the economic activities related to

transportation systems, including Shipping Economics and Port Economics. It
encompasses a wide range of concepts, theories, and methods from economics applied
to the transportation sector.
Transportation system is an integral part of a modern day society, designed to provide
efficient and economical movement between the component parts of a country and
offer maximum possible mobility to all citizens (Leshem and Ritov, 2007). According
to (Leshem et al, 2007), road transportation is a critical link between all the other
modes of transportation and their proper functioning. It is the lifeblood of
industrialised economies. Unfortunately, the existing road network, including the
motorway system, is becoming explosively congested due to increase in the number
of vehicles and inability to build new and larger motorways (David and Gregory,
2010).
Transportation economics in African cities present both significant challenges and
opportunities that directly impact urban development and economic productivity.
Many African cities suffer from inadequate transportation infrastructure, which results
in congestion, high travel times, and increased costs for commuters and businesses
alike. The reliance on informal transit modes, such as shared taxis, motorcycle taxis,
and minibusses, although providing essential mobility for many residents, often leads
to inefficiencies, safety concerns, and environmental issues.

a) Urban transportation models (e.g., modal choice, congestion pricing)

Congestion pricing is an untapped transportation strategy that can reduce traffic
congestion, improve air quality and raise the revenue essential to implement needed
transportation measures that are effective in improving transportation services and
facilities. While experience with congestion pricing is limited, there are sufficient
examples and experiences around the world to demonstrate that, when implemented
properly, it virtually never fails to be an effective tool to curb congestion. Yet, when
initially proposed, it never fails to be controversial. This is in part due to the lack of
research on the equity impacts on different socio-economic groups. This is the
dichotomy and the dilemma of congestion pricing that every city must face in
implementing this new approach to congestion management.
Congestion pricing is the policy of charging drivers a user fee for using certain lanes
of roadways that experience congestion, thereby discouraging many drivers from
using those lanes and keeping them free of congestion (Abulibdeh ,2015 and Black ,et
al 2010). Congestion pricing captures congestion, operating and capital and
environmental costs of vehicle use; therefore, it is considered the best way to deal
with congestion and environmental problems (Kitchen, H. (2008). The main purpose
of congestion pricing is to mitigate/manage traffic congestion by encouraging drivers
to switch to use other modes of transportation, use other routes, or change time of
travel (shifting peak-period travel to other off-peak period (FHAW ,2006). One of the
objectives of congestion pricing is to reduce the number of congestion points along
roads and hence minimize the length of individual queues that do form. This results in
relatively smooth traffic flow with improved fuel economy and reductions in
emissions (Abulibdeh, A. (2012),)

Several types of congestion pricing have been implemented in several cities around
the world. Recent studies in Europe and Asia envision road pricing in the form of area
licensing, high-occupancy toll lanes or cordon tolls (Hyman, 2002 and de Palma et al
2003) . This system has been implemented recently in Stockholm. Cordon pricing
charges motorists whenever they pass any of the charging points that are located at the
entrances of an imaginary zone around a congested area. Charges are flexible,
meaning that they vary according to vehicle type, time of day, location and direction
travelled (NCHRP (1994)).
The charges vary between peak and off-peak hours and between weekdays and
weekends. This system has proven to be effective in mitigating congestion.
Congestion pricing impacts the travel activities of different socioeconomic groups in
different ways, albeit in varying ways depending on the circumstances. Cordon
pricing has been implemented in some European and Asian cities and has been
proposed, but not implemented for North-American cities. All the studies investigated
the changes that may occur on people’s travel behaviour and hypothesized different
ways of redistributing the generated revenues to achieve equity among different
travellers based on their socio-economic characteristics. But none of these studies
tried to investigate the traveller’s preferences in redistributing the generated revenues
to achieve equity between different socio-economic groups.
Concerns about equity are raised when considering this system. Travellers who come
from outside the cordon have to pay the tolls while residents inside the cordon receive
the benefits; also travellers who must travel into and out of the cordon many times
during the day have to pay each time. For example, the proposed cordon pricing in
Edinburgh, Scotland, was found to be inequitable since people living at equal
distances from the proposed cordon were treated differently. Affluent neighbourhoods
were exempted from payment as a result of the city’s administrative boundaries. On
the other hand, it was suggested that less affluent neighbourhoods be subjected to the
cordon charges Raje ,2004 and Rouwendal, et all 2006). This example demonstrates
the importance of the link between income distribution and spatial equity when
designing cordon-pricing systems.
Congestion pricing is a traffic-demand management tool that helps move
transportation in the direction of economic and environmental sustainability. At the
same time, however, it raises equity issues related to social sustainability as it impacts
the travel behaviour of commuters. Equity is operationalized by analysing the
progressivity or regressivity of the effects of cordon pricing on groups of travellers
based on their socio-economic and demographic factors. Congestion pricing is
considered to be regressive or progressive policy if it burdens or favours
disadvantaged groups of travellers relative to each other. The interpretation of equity
is also based on the broader assessments of transport equity that seek fairness in
accessibility and mobility across different socio-economic and demographic groups
Levknson, D. (2010).
b) Public transit vs. private transportation
It is said that the car is convenient but consumes high-energy per passenger,
while public transport is an environmentally friendly mode but needs high cost of
investment and management. However, this view does not take account of urban
structure such as population size and density. For instance, higher population density
would cause congestion and consequent inconvenience for car usage. This may shift
demand to public transport use. On the other hand, in a lower density of urban area,
public transport attracts only a small passenger demand and thereby accounts for a
high-energy consumption per passenger than private cars. The urban structure
therefore can be the dominant factor for determining the effectiveness of urban
transport. To do the commuting, the residents need communication and transportation
facilities. Cervero, et al.(2017) states that transportation is welfare for workers
because transport is used to connect workers in the suburbs to get to the city besides
transport is also used to shorten the travel time of workers from the area of origin to
the place of work. The commuter have a problem with the choice of using the most
efficient mode of transportation to be used both in terms of cost, time,and comfort.
There are several types of alternative modes of transportation, such cars,motorbikes,
bicycles, public vehicles, online-based transportation, buses, and other public
transportation
The urban structure is affected by the provision of transport infrastructure and its
service level. In classical urban economic models, the location of agents and urban
shape vary depending on the transport conditions. Therefore, the urban structure and
transport effectiveness are inter-dependent. Even if the population size and density is
the same, the efficiencies of private and public transport might be different due to the
urban structure because of their historical pattern of land use and transport
development.Setyodhono (2017) states that transportation problems not only because
of the availability of transportation facilities and infrastructure but are also influenced
by the behavior and characteristics of users in choosing modes of transportation which
will have an impact on the severity of congestion
Warpani (1990) states that the selection of transportation modes in urban areas is not
through a random process. The thing that determines the choice of transportation
mode is the factor of distance, mode speed, comfort, availability, cost, constraints,
age, area, social, and social-economic status of a person.
c) Traffic congestion and economic costs
The road congestion occurs when the demand for traffic surpasses the capacity of the
road network; the situation results in a decrease in the speed of moving vehicles or
total prevention of free movement (Bull, 2013 and Raheem et al, 2015). Normally
traffic jam occurs during peak hours in morning and evening, according to Hartgen
and Fields (2017), traffic jam is a line of stationary or very slow-moving traffic,
caused by road works, an accident, or heavy congestion. Angus and Bertram (2019)
define traffic jam as a situation in which a long line of vehicles on a road have
stopped moving or are moving very slowly. Peak hours are a part of the day during
which traffic congestion on roads and crowding on public transport is at its highest.
The term is often used for a period of peak congestion that may last for more than one
hour Hartgen and Fields (2017). A peak hour is a part of the day during which traffic
congestion on roads and crowding on public transport is at its highest Lomendra et al
(2018).
Various studies have been carried on in regard of traffic congestion and its effects.
For example a survey from the United Kingdom found that traffic congestion was
perceived as the most important factor likely to affect costs and service. (Fernie, and
Marchant, 2000). A large number of transport economics studies focus on the time
component of commuting costs (Small and Verhoef, 2007). Estimates of the time
component of commuting costs vary by a large margin, but studies tend to find that
the value of travel time is 20% to 100% of the hourly (gross) wage (Small, 1992). De
Borger and Fosgerau (2008) find strong reference- point effects in stated preference
data and suggest a way to correct for this effect.
Revealed preference studies tend to find substantially higher values than stated
preference studies. Although the time component is an important part of the
commuting costs, the other components are not negligible, and may therefore not be
ignored (Cogan, 1981). For commuters, the monetary costs are thought to be about
30% to 40% of the time costs (e.g., Fujita, 1989;Small, 1992). Furthermore, workers
may vary the speed of their commute through their choice of travel mode, so the share
of the time costs as part of the total commuting costs is endogenously determined. As
a consequence, information on the costs of the time component is not necessarily
informative about the total commuting costs.
The study on traffic congestion by Elisenguo (2013), examined the social economics
impact of road congestion and found that publi transport system in Dar es Salaam
little meet the basic needs of its inhabitant. Likewise, Angus and Betram
(2019) ,assessed the contemporary awareness of the effects of congestion on traffic
and accidents; and found that an inverse relationship between accidents and
congestion would imply a benefit of congested conditions for road safety,posing a
difficult situation for traffic management. Moreover, Onyeneke et al (2018) modelled
the effects of traffic congestion on economic activities, accidents, fatalities and
casualties; and found that traffic growth and number of registered vehicles in urban
areas are linked with growing number of accidents and fatalities. Accidents account
for a significant share of recurring delays. As traffic increases, people feel less safe to
use the roads. It is observed that traffic congestion in urban centres could be viewed
as a result of mandatory daily trips such as workplace,home, school or voluntary.The
increase in traffic congestion is more than a time-wasting nuisance to freight movers.
High levels of traffic congestion have been found to reduce the number of trip a truck
driver can make in a day and therefore increase shipment costs, which impacts the
competitiveness of metropolitan manufacturers and other businesses. Theoretically, it
goes without saying that there is a link between per capital income of an economy and
such economy‟s marginal labour productivity. One justification for the special
emphasis on labour productivity is perhaps because labour is a universal key resource.
The term labour productivity implies the ratio of physical amount of output achieved
in a given period to the corresponding amount of labour expended. By implication,
productivity here means the physical volume of output attained per worker or per
man-hour. (Oyeranti 2000)

Evolution of transportation policy and economics

Possible Policy prescriptions

There is no shortage of topics for transportation economists in the postregulatory

environment of the 21st century. The conceptual frameworks and theoretical
and econometric tools continue to develop along with computer capacity and
complexity of transportation systems. As Winston (1985) so aptly documented, the
field of economics has an extensive repertoire of tools to apply to topics
in transportation economics.

As our modern systems depend more and more on small, quick shipments, highway
freight transportation will continue to be an important part of our national freight
transportation network. Simply building more rail or improving waterway
transportation—two modes that cause fewer GHG emissions—will not be enough to
meet GHG reduction goals as the reality is that shippers will not divert enough traffic
from highway to these alternate modes to make much of a difference. Economists, by
studying freight behavior and distribution systems, can continue to explore mode
choice and guide policymakers into those investments that are most effective in
achieving the desired goals.

Similarly, in urban transportation systems, policymakers need to make investment

decisions that reflect mode choice decisions actually made by passengers rather than
assuming that alternatives to the automobile will automatically reduce highway travel.
As historical data show, the automobile share of urban local traffic has grown while
the transit share has fallen, despite large investments in public transport infrastructure.
This is not to say that investment in public transport is useless, only that policymakers
have to examine where such investment will yield the best results and act accordingly
—even if such investment is in highway improvements/maintenance.

In all cases, most economists will agree that the first step towards creating a more
efficient and effective transportation system is to get user fees and prices charged for
the use of transportation systems in line with the costs that users impose on the system.
The place to start is obviously in the realm of highway pricing. Since highway user
fees have historically failed to recoup the costs that users impose on the system, the
highway system is overused and this is one reason the current structure of user fees is
not sufficient to maintain and improve the system. The fact that highway transport has
essentially been subsidized by charging lower than optimal user fees—the current US
gasoline tax is estimated to be about half of the optimal road tax (Parry and
Small, 2005)—has also led to distortions in the pricing and investment in other modes,
especially public transit. The result is a transportation system that is in desperate
financial straits.

As policymakers move towards pricing closer to optimal pricing through, for instance,
implementation of a VMT tax for highway vehicles, they need to work with
economists to select appropriate prices realizing the different economic behaviors
across locations and differences between passenger and freight modes of
transportation. Successful pricing policy will need to consider these behavioral
differences—which are the realm of economics and economists.

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