ABSTRACT
This chapter explains economic theory to public issues in the development and use of transportation infrastructure. It develops basic principles of economics as applied to transportation infrastructure, and examines perspectives relevant to public policy and management in this area. The chapter discusses practice in highways and airports to economic principles and points to areas of divergence. It suggests how different disciplinary perspectives can be reconciled in ways that might improve policy and management in the development of transportation infrastructure. The economic issues of passenger transportation are different than those associated with freight. Passenger transportation is a consumption item purchased by individuals, while freight transportation is an input into the production process. There are two principles of equity in economics: first, that the costs of government should be distributed in proportion to the benefits received, and second, that the costs should be distributed according to the ability of citizens to pay.
