MAXIMIZING, MEASURING, AND NOT DOUBLE COUNTING TRANSPORTATION-IMPROVEMENT BENEFITS: A PRIMER ON CLOSED- AND OPEN-ECONOMY COST-BENEFIT ANALYSIS. IN: URBAN TRANSPORT

In a "closed economy" cost-benefit analysis of a public investment, all affected economic agents matter. In such an analysis, if the price equals marginal cost in all affected markets, correctly measuring benefits requires analyzing only the use made of the improvement; "non-user" costs and benefits cancel out. Only if price is unequal to marginal costs in affected markets do unduplicated net nonuser benefits and costs exist. In an "open-economy" cost benefit analysis, gains and losses to outsiders are ignored. The nature of non-user insider benefits, particularly from 'job-creation," is discussed in this paper.