Capacity cost structure, welfare and cost recovery: Are transport infrastructures with high fixed costs a handicap? KU Leuven University of Antwerp
In this paper, we consider a region that invests in infrastructure used by both local demand and through traffic. We then compare transport systems that have, for a given capacity, the same total infrastructure cost but vary in the proportion of fixed costs and variable capacity costs. We show that, compared to a benchmark infrastructure which has zero fixed costs, an infrastructure which has (ceteris paribus) a higher share of fixed costs leads ...