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Essay / Research Paper Abstract
This 3-page paper discusses how the elasticity of price demand fits Peabody's principal, which is that an increase in highway capacity increases traffic volume by an amount to leave the trip costs unchanged. Bibliography lists 5 sources.
Page Count:
3 pages (~225 words per page)
File: AS43_MThighecon.rtf
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Unformatted sample text from the term paper:
congestion, back-ups and gridlock, things open up and flow through for a time. Then what happens one, two, five years later is that the expanded highway is no longer enough,
and congestion, back-ups and gridlock happens again. This is the scenario with which most urban planners are familiar. Peabody and Associates, a transportation consulting firm has dubbed it the Peabody
principle, and it states that an increase in highway capacity ends up increasing traffic volume. The result is that the private trip cost remains unchanged over the long run. The
commute, for the driver, ends up becoming just as long as it did before. Before we dissect this further, lets first
define price elasticity of demand. In economics, this involves how much a quantity demanded of a particular good or service changes when the price changes (Price Elasticity of Demand, 2009).
In terms of highway economics, price elasticity of demand can be determined by how much a driver is willing to pay to use a highway to get from point A
to point B. Given that, we can say that as the price elasticity of demand for highway travel decreases in absolute value, the Peabody principle is a more accurate prediction
of reality. A decrease in the price of elasticity of demand means that more drivers are going to want to clog
the roads. The U.S. Department of Transportation points this out by indicating that when an improved road (or a new road) comes online, more drivers are willing to try that
road to take advantage of improved driving conditions (Forecasting Traffic for Benefit Calculations, 2007). Some scholars also point out that another problem is that drivers arent being charged enough (through
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