Vista partner published in Insights into Regional Development

Oslo, 21.04.2023

The article is entitled Agglomeration Benefits and Costs of Investing in Urban Transport Infrastructure and it is written by professor and partner in Vista Analyse Haakon Vennemo. The article is freely available and can be found here.

The foundation of the article is that the inhabitants of a city benefit from each other without them taking it into account. As such, the city is a center of positive external effects between residents. The positive externalities are a fundamental reason for living in cities despite high housing costs and the negative externalities that also exist in cities: congested traffic, pollution and higher crime rates.

The exacts mechanisms of external impacts in cities remain a mystery, but researchers have long pointed out that investing in better roads and railways in an urban area reduces travel costs and reinforces the area's urban character. This reinforcement of the urban character of the area has been omitted from ordinary cost-benefit analyses. The article points out how cost-benefit analysis can be expanded to take into account the contribution to the urban character of the area and the positive and negative externalities that accompany cities.

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