²
Faculteit Bedrijfswetenschappen en Economie
Stadscampus Schooljaar 2025 - 2026
Prinsstraat 13 Semester 2
2000 Antwerpen
Summary Transport Economics
Prof: Joost Hintjens & Peter Shobayo
Inhoudsopgave
Prof: Joost Hintjens & Peter Shobayo.......................................................................................................................1
Samenvatting Operations Management |1
,1. Introduction...........................................................................................................................................................4
1.1 Background economics...............................................................................................................................4
1.1.1 Derived demand..............................................................................................................................4
1.1.2. The traffic and transportation system...........................................................................................5
1.2 Transportation subsystems.........................................................................................................................5
1.3 Measuring transport and transportation performance.............................................................................6
2. Demand for transport...........................................................................................................................................8
2.1 Introduction................................................................................................................................................8
2.2 The 4(5)-step model....................................................................................................................................8
2.3 Micro-economic approach to transport choice behavior........................................................................14
2.4 The activity-based approach.....................................................................................................................15
2.5 Empirical application: freight transport in Europe...................................................................................15
3. Transport supply..................................................................................................................................................17
3.1 Outputs, inputs and heterogeneity..........................................................................................................17
3.2 Use of cost functions................................................................................................................................18
3.3 Transport supply and policy......................................................................................................................19
4. Equilibrium and market structure.......................................................................................................................20
4.1 The vicious circle.......................................................................................................................................20
4.2 Market structure.......................................................................................................................................21
5. Transport policy as a part of a general policy.....................................................................................................23
5.1 Favored tool for political objectives.........................................................................................................23
5.2 First-best and second-best optimum........................................................................................................24
6. Charging for external costs..................................................................................................................................26
7. Pricing policy........................................................................................................................................................28
7.1 Marginal cost rule.....................................................................................................................................28
7.2 Second-best solutions...............................................................................................................................30
1. Introduction......................................................................................................................................................3
1.1 Background economics............................................................................................................................3
1.1.1 Derived demand......................................................................................................................3
1.1.2. The traffic and transportation system....................................................................................4
1.2 Transportation subsystems......................................................................................................................4
1.3 Measuring transport and transportation performance...........................................................................5
2. Demand for transport.......................................................................................................................................7
2.1 Introduction.............................................................................................................................................7
2.2 The 4(5)-step model.................................................................................................................................7
2.3 Micro-economic approach to transport choice behavior......................................................................13
2.4 The activity-based approach..................................................................................................................14
2.5 Empirical application: freight transport in Europe................................................................................14
Samenvatting Operations Management |2
,3. Transport supply.............................................................................................................................................16
3.1 Outputs, inputs and heterogeneity........................................................................................................16
3.2 Use of cost functions..............................................................................................................................17
3.3 Transport supply and policy...................................................................................................................18
4. Equilibrium and market structure..................................................................................................................19
4.1 The vicious circle....................................................................................................................................19
4.2 Market structure....................................................................................................................................20
5. Transport policy as a part of a general policy................................................................................................21
5.1 Favored tool for political objectives......................................................................................................21
5.2 First-best and second-best optimum.....................................................................................................22
6. Charging for external costs.............................................................................................................................24
7. Pricing policy...................................................................................................................................................26
7.1 Marginal cost rule..................................................................................................................................26
7.2 Second-best solutions............................................................................................................................28
Samenvatting Operations Management |3
, 1. Introduction
1.1 Background economics
1.1.1 Derived demand
- Derived nature of the demand for traffic and transportation:
o Nobody transports goods just for fun: there is a demand for transport because there
is a demand for goods
o It shows an intermediary character
o It’s the result of a primary need for goods/services => transport is a derived need
- Graphical analysis (we need to be able to draw a simple graph ourselves):
2 pairs of supply & demand curves:
1) demand/supply for goods
(Dg/Sg)
A = the equilibrium (when Dg =
Sg)
=> Equilibrium price A
and quantity Y
2) demand/supply for
transport (DT/ST)
M = the equilibrium (when DT = ST)
=> Equilibrium price M and quantity E
o Demand & supply for goods:
Consumer surplus (CS) = triangle above line AA
Some customers are willing to pay more than price A (eg C or K)
Producer surplus (PS) = triangle under line AA
Some producers are willing to sell at a lower price (eg B or L)
Examples of shifts: Sg goes to the left when resources are more expensive, D g
goes to the left when demand decreases (because of bad news for example)
o Demand & supply for transport:
We consider a quantity X that includes transport:
Determine the supply price B and the willingness to pay C
=> C – B = the maximum cost of transportation = T – X
We go to the right of CB to line KL => we find equilibrium M and
assume DT (ends in Y) and ST
o Until here the willingness to pay for transport is bigger or
equal to the supply price (the little triangle left from M)
o K – L = the difference between the price that consumers
want to pay (K) and the producer wants to ask (L) = the price
difference that allows the producer to transport goods
Samenvatting Operations Management |4
Faculteit Bedrijfswetenschappen en Economie
Stadscampus Schooljaar 2025 - 2026
Prinsstraat 13 Semester 2
2000 Antwerpen
Summary Transport Economics
Prof: Joost Hintjens & Peter Shobayo
Inhoudsopgave
Prof: Joost Hintjens & Peter Shobayo.......................................................................................................................1
Samenvatting Operations Management |1
,1. Introduction...........................................................................................................................................................4
1.1 Background economics...............................................................................................................................4
1.1.1 Derived demand..............................................................................................................................4
1.1.2. The traffic and transportation system...........................................................................................5
1.2 Transportation subsystems.........................................................................................................................5
1.3 Measuring transport and transportation performance.............................................................................6
2. Demand for transport...........................................................................................................................................8
2.1 Introduction................................................................................................................................................8
2.2 The 4(5)-step model....................................................................................................................................8
2.3 Micro-economic approach to transport choice behavior........................................................................14
2.4 The activity-based approach.....................................................................................................................15
2.5 Empirical application: freight transport in Europe...................................................................................15
3. Transport supply..................................................................................................................................................17
3.1 Outputs, inputs and heterogeneity..........................................................................................................17
3.2 Use of cost functions................................................................................................................................18
3.3 Transport supply and policy......................................................................................................................19
4. Equilibrium and market structure.......................................................................................................................20
4.1 The vicious circle.......................................................................................................................................20
4.2 Market structure.......................................................................................................................................21
5. Transport policy as a part of a general policy.....................................................................................................23
5.1 Favored tool for political objectives.........................................................................................................23
5.2 First-best and second-best optimum........................................................................................................24
6. Charging for external costs..................................................................................................................................26
7. Pricing policy........................................................................................................................................................28
7.1 Marginal cost rule.....................................................................................................................................28
7.2 Second-best solutions...............................................................................................................................30
1. Introduction......................................................................................................................................................3
1.1 Background economics............................................................................................................................3
1.1.1 Derived demand......................................................................................................................3
1.1.2. The traffic and transportation system....................................................................................4
1.2 Transportation subsystems......................................................................................................................4
1.3 Measuring transport and transportation performance...........................................................................5
2. Demand for transport.......................................................................................................................................7
2.1 Introduction.............................................................................................................................................7
2.2 The 4(5)-step model.................................................................................................................................7
2.3 Micro-economic approach to transport choice behavior......................................................................13
2.4 The activity-based approach..................................................................................................................14
2.5 Empirical application: freight transport in Europe................................................................................14
Samenvatting Operations Management |2
,3. Transport supply.............................................................................................................................................16
3.1 Outputs, inputs and heterogeneity........................................................................................................16
3.2 Use of cost functions..............................................................................................................................17
3.3 Transport supply and policy...................................................................................................................18
4. Equilibrium and market structure..................................................................................................................19
4.1 The vicious circle....................................................................................................................................19
4.2 Market structure....................................................................................................................................20
5. Transport policy as a part of a general policy................................................................................................21
5.1 Favored tool for political objectives......................................................................................................21
5.2 First-best and second-best optimum.....................................................................................................22
6. Charging for external costs.............................................................................................................................24
7. Pricing policy...................................................................................................................................................26
7.1 Marginal cost rule..................................................................................................................................26
7.2 Second-best solutions............................................................................................................................28
Samenvatting Operations Management |3
, 1. Introduction
1.1 Background economics
1.1.1 Derived demand
- Derived nature of the demand for traffic and transportation:
o Nobody transports goods just for fun: there is a demand for transport because there
is a demand for goods
o It shows an intermediary character
o It’s the result of a primary need for goods/services => transport is a derived need
- Graphical analysis (we need to be able to draw a simple graph ourselves):
2 pairs of supply & demand curves:
1) demand/supply for goods
(Dg/Sg)
A = the equilibrium (when Dg =
Sg)
=> Equilibrium price A
and quantity Y
2) demand/supply for
transport (DT/ST)
M = the equilibrium (when DT = ST)
=> Equilibrium price M and quantity E
o Demand & supply for goods:
Consumer surplus (CS) = triangle above line AA
Some customers are willing to pay more than price A (eg C or K)
Producer surplus (PS) = triangle under line AA
Some producers are willing to sell at a lower price (eg B or L)
Examples of shifts: Sg goes to the left when resources are more expensive, D g
goes to the left when demand decreases (because of bad news for example)
o Demand & supply for transport:
We consider a quantity X that includes transport:
Determine the supply price B and the willingness to pay C
=> C – B = the maximum cost of transportation = T – X
We go to the right of CB to line KL => we find equilibrium M and
assume DT (ends in Y) and ST
o Until here the willingness to pay for transport is bigger or
equal to the supply price (the little triangle left from M)
o K – L = the difference between the price that consumers
want to pay (K) and the producer wants to ask (L) = the price
difference that allows the producer to transport goods
Samenvatting Operations Management |4
