PLANNING FOR A SUSTAINABLE EUROPE? - TU Berlin

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services in Europe (CEC1999b). Button (1993) also stresses the declining importance of
transport costs and estimates that they now account for as little as 2 to 3 percent of total
costs. For the US context, Boarnet (1997) points out that previous studies often
overestimated the macroeconomic effects of road investments by counting in both the
reduced travel costs for producers and the resulting lower consumer prices, hence in
effect double-counting the benefit. Also, since in post-industrial societies products are
increasingly high-value goods resulting transport cost components are relatively low.
This does not mean that transport infrastructures overall are less important. But the
demand for higher quality, faster infrastructure is more important than a quantitative
improvement of infrastructures per se. It should also be noted that the rise of
telecommunication has not necessarily replaced travel with electronic transactions but in
many instances even created new demand for movement. Even in cases where
production costs are lowered due to a fall in transport costs caused by infrastructure
investment, the output effect depends on whether the fall in costs is passed through to
prices and, if it is, on the price elasticity of demand. Thus market elasticities and
competitive conditions in the transport-using sector are critical determinants of the
outcome.
2.2.4 Inter-regional trade theory
In some cases, poor accessibility may actually benefit and protect businesses in
weaker regions. In these cases, better transport connections open local markets to the
increased competition of larger businesses outside the regions that produce a greater
variety of products at lower prices. In other words, the regional monopoly power of