CASA Working Paper 199
3 June 2015
Spatial Interaction, Imperfect Competition and the Evaluation of User Benefit
The spatial interaction model as represented by the entropy maximising trip distribution model is located in economic theory as a model that represents imperfect competition. In doing so it minimises the consumer deadweight loss associated with imperfect competition although it never eliminates it. The evaluation of benefits under imperfect competition is shown to require the inclusion of changes in land rent but is otherwise similar to the standard cost benefit analysis. A worked example suggests that the inclusion of rents and a correction for double counting results in lower estimates of benefit than obtain when only trip costs are measured.
Author: Robin Morphet
Publication Date: 27 April 2015
Download Working Paper 199. File size 2.7MB, PDF format.