Transportation Market Distortions

Properly functioning markets effi ciently allocate resources. Such markets must refl ect certain principles, including consumer options, cost-based pricing, and economic neutrality. Transportation markets oft en violate these principles. This report examines these distortions and their implications for transport planning. Transportation market distortions include various types of underpricing of motorized travel, planning practices that favor automobile travel over other modes, and land use development practices that create automobile-dependent communities. Although these distortions may individually appear modest and justifi ed, their impacts are cumulative and synergistic, leading to economically excessive motor vehicle use. These distortions exacerbate many problems, including traffi c congestion, facility costs, accidents, reduced accessibility (particularly for non-drivers), consumer transportation costs, ineffi cient energy consumption, and excessive pollution. Market reforms that reduce these distortions would provide signifi cant economic, social, and environmental benefi ts. In a more effi cient market, consumers would choose to drive less, rely more on alternative transport options, and be bett er off overall as a result.