1. Outline the characteristics of the main modes of transport

Modes of transport are the means of transport, basically road, rail, air, water and pipes. Road has advantages in terms of flexibility, and connectivity, suitable to transport almost all goods. Rail is best suited for movement of bulk of goods, however problems of interchange can reduce the its efficiency. Air has advantage of moving passengers over long distances and in a relatively high speed. Pipes are good in transporting liquids, and gasses, however they tend to promote monopolies.

2. Explain why transport is derived demand

Derived demand is one that caused by demand for some other good and service. As most of the people do not travel just to travel, most of them do it for a certain purpose, therefore the demand for travel is derived.

3. Explain how to measure transport demand

The demand for the transport is determined by many factors, the most important ones are national income, the need to communicate to work and the costs of transport. If those factors are measured, there can be eablished the demand for transport

4. Explain how transport forecasts are made and why?

Various assumptions are made by when forecasting the demand for transport; the GDP growth, the fuel prices, the population growth, car ownership and industrial output and the demand and supply of import goods. The forecasts are done to estimate the need for the future transport network, to estimate where the greatest bottlenecks are going to occur, and to be able to estimate the likely effect of certain transport policies.

5. Explain some of the of the main ways in which transport sector can be described through data

The most important ways of measuring the transport is by assessing the amount of passengers and kilometres they travelled and by assessing the tonnage of freight and kilometres it travelled.

6. Outline economies of scale and their application to transport

There are two types of economies of scale – internal and external. The former are:
The technical economies of scale – when with the increase in output the unit costs fall. It can be applied to transport when a company can increase the size of vehicles, therefore transport in a cheaper manner.
Purchasing economies. when a company is able to buy cheaper, because it is buying a greater bulk of goods. Example in transport is ability to buy cheaper fuel
Managerial economies. When in a large firm more labour can specialise, hence work more efficiently.
Financial economies. When a company can buy more due to the increase in its capacity.
External economies of scale occur when the increase in the size of an industry is leading to fall in long run average costs of an industry.
transport example are airports, where many different businesses are clustering together (ie shops, catering services etc.)

7. Describe contestability in transport markets

Contestability is the extent to which barriers to entry and exit the market are free and costless. Road transport is relatively contestable due to the relatively small entry costs, while the aviation industry is not contestable.

8. Describe barriers to entry and their application to transport

Barriers to entry are all the costs that have to be undertaken by every new entrant to a particular market. The barriers to entry are relevant to the aviation market, where they are relatively high, therefore not many new entrants can enter the market. This reduces the contestability and allows oligopolies to emerge.

9. describe the barriers to entry and their application in to the transport market

A barrier to entry is any obstacle that deters new firms from entering the market. This include:
High set up costs – ie the capital required to set up small haulage company is relatively low, while opening new fly operator is much more expensive
Economies of scale – when the established firms are limit pricing, therefore not allowing new entrants to the market, ie the main freight transporters ie the DHL.
Brand loyalty
Intimidation

10. describe the deregulation in the transport market

The deregulation is process in which the government is removing legal restrictions that act as a barrier to competition in a market. In Britain in the early 1980, duting the “thatcher era’ most of the transport was deregulated. The bus industry was deregulated in 1985and 1985, when almost all legal barriers to entry were removed, in order to increase the competitiveness on the market. Within the EU there has been a single open competitive aviation for the carriers of the member states. Those reforms made the market much more contestable.

11. Explain and describe privatisation in the transport market

Privatisation is the process during which goods owned by the public sector are sold off to the private sector. In 1980s during Thatcher’s premiership many of transport industries were privatised. The bus industry was to a large extent privatised in the 1980s, the as all state companies were changed into for profit companies or privatised. In 1993 the rail companies were privatised, there was a separation of the infrastructure from the operation.

12. Explain the negative externalities due to ever increasing transport demand

The most important negative externality is the increase in the amount of CO2 in the atmosphere, as most of transport vehicles are oil powered. Others are: noise, congestion and destruction of landscape.

13. Describe how transport interacts with the environment

As most of transport vehicles are oil powered, the increase in transport is resulting in destruction of the natural environment. For instance, in the UK transport was responsible for 23% of overall pollution.

14. Describe and evaluate sustainability issues in transport

Sustainability in transport is ability to continue to operate in the long run. One of the biggest problems of transports is the fact that the most important branches are unsustainable. It stems from the fact that most of them use oil as fuel, and scarcity of the resource and fact that it is not renewable makes most of the modes of transport unsustainable.

15. Explain why traffic congestion is a cause of a market failure.

It is a market failure, because it increases the amount of pollution, increases the time that people to commute to work and decreases their standards of living by increasing noise. This is a market failure, because the market failes to provide necessary resources to decrease the average amount of cars in the

16. Describe the costs of congestion.

The traffic congestion imposes a variety of costs on the society. Firstly it increases the time and the costs of commuting in the city. This increases the price of the labour force and can affect the price of products that have to be transported to the city.

Moreover, congestion increases the amount of CO2 emitted into the atmosphere, as the fuel efficiency decreases during congestion.

17. Explain how to deal with congestion

Some of governments, ie the UK one are dealing with congestion by imposing congestion charge, which artificially increases the price of car usage in the urban areas. In London it is charge of five pounds per day. Other ways of reducing the congestion is the road pricing.

Other policy of the UK government to reduce the pollution is by using regulations. The introduction of the Low Emission Zone

Different ways of dealing with congestion is by increasing the amount of roads and public transport in the city. Building more roads relief the existing infrastructure, however is perceived by most of the economists as a short sighted solution. It is argued that leads to an increase in the amount of cars on roads.

The latter policy is to provide an alternative to cars, which is another relief for the existing infrastructure.

18. Describe road pricing schemes

Road pricing are all charges that are imposed on the users of roads by the government. The road charges includes fuel taxes, licence fees, parking taxes, tolls, and congestion charges. In the UK the road pricing consists of congestion charges, vehicle excise duty and fuel taxes.

19. Outline how other countries tackle congestion

Other countries tackle the congestion problem in a variety of other ways. Singapore, for instance is using an electronic road pricing, by putting electronic chips into car that monitor the amount of CO2 produced by the car.

20. Describe the role of the public and private sectors in transport

The most important role of the public sector is to provide the infrastructure. Although the private sector is often involved in the provision of the funds for the infrastructure, in PFI – Private Finance Initiative – the private sector is participating in funding the projects.

21. Explain what is meant by the cost benefit analysis, when it is used and its limitations (transport)

The cost benefit analysis is the balance of the of the social costs and benefits. By comparing those the CBA is assessing whether the project is cost-effective from the point of view of the society.

In transport the CBA is most

22. Explain how the government approaches new road schemes

The government is now using the COBA model, which counts which project will reduce most of the costs. It splits then into three components – time saving, costs of accident saving and vehicle operating savings. It compares it with the expenditure which is the sum of the construction and maintenance costs.

23. Describe the integrated transport policy

The integrated transport policy is one which objective is to integrate all modes of transport, water, air, rail and road transport. It allows the people and freight to switch easily between different modes of transport. It seeks to shift the transport to more sustainable fuels.


24. Describe the main features of the current transport policy

It tries to combine the economic growth with the reduction of emission of CO2 to the atmosphere. Is supposed to ensure sustained investment is the way there will be enough resources to stably increase the capacity of the infrastructure.

25. Outline sustainable transport policy

Sustainable transport is one that will be able to be run in the long run.