Discussion Paper Details

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Title: Does Supporting Passenger Railways Reduce Road Traffic Externalities?

Author(s): Rafael Lalive, Simon Luechinger and Armin Schmutzler

Publication Date: February 2013

Keyword(s): Pollution, Public Transport, Railways and Road Accidents

Programme Area(s): Industrial Organization and Public Economics

Abstract: Many governments subsidize regional rail service as an alternative to road traffic. This paper assesses whether increases in service frequency reduce road traffic externalities. We exploit differences in service frequency growth by procurement mode following a railway reform in Germany to address endogeneity of service growth. Increases in service frequency reduce the number of severe road traffic accidents, carbon monoxide, nitrogen monoxide, nitrogen dioxide pollution and infant mortality. Placebo regressions with sulfur dioxide and ozone yield no effect. Service frequency growth between 1994 and 2004 improves environmental quality by an amount that is worth approximately 28-40 % of total subsidies. An analysis of household behavior shows that the effects of railway services on outcome variables are driven by substitution from road to rail.

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Bibliographic Reference

Lalive, R, Luechinger, S and Schmutzler, A. 2013. 'Does Supporting Passenger Railways Reduce Road Traffic Externalities?'. London, Centre for Economic Policy Research.