ITEM NO.

1 INTRODUCTION
Population in the Philippines is projected to reach 102.9 million in the year 2015 (PSA 2014), with a
majority residing in dense urban areas like Metro Manila. Given dynamic economic activities in these
communities and a low level of motorization at around 9 cars per 1,000 people, the need for increased
public conveyance and motorization is evident. The agglomeration of these issues results to congestion
concerns not only on living spaces, but also on public infrastructure including road networks.

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Public transportation in the Philippines in general is fraught with problems inadequate road
infrastructure and traffic congestion around urban areas. In Metro Manila alone, an average of 191
persons live per hectare within a relatively small area of 620 km2 . Around 2 million vehicles were also
recorded in 2010 to have plied its 1000 km of road infrastructure. Several modes of mass transportation
operate in Metro Manila, including (a) 4 rail transport lines: Light Rail Transit 1, Light Rail Transit 2,
EDSA-Mass Transit (MRT-3) and PNR south commuter line, and (b) road-based transport: public utility
buses (PUBs), taxis, public utility jeepneys (PUJs), Asian Utility Vehicles (AUVs), Tricycles (TC) and
pedicabs (bicycles with sidecar)

Travel with intra and intercity routes often require commuters to avail of two or more types of
transportation. Buses operate along the main thoroughfares such as the Epifanio Delos Santos Avenue
(EDSA), Jeepneys operate along secondary roads, AUVs have fixed routes of no more than 15 kilometers,
and Tricycles and pedicabs seat only one to three people at short distances in residential areas and
arterial roads. Among the road-based transportation options, buses offer more in terms of affordability
and efficiency as they carry more people using less road space. With inadequate mass transport
infrastructure in the city, buses become an indispensable alternative for the commuting public.

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LAND TRANSPORTATION

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MARITIME TRANSPORTATION

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AIRPORT TRANSPORTATION

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ITEM NO. 2 FINANCIAL MECHANISM

A financial mechanism accepted by all stakeholders involved is required to enable the jeepney
industry to switch to clean vehicles. The current road-based public transport system is fully
financed through fare box revenues. The government does not provide any subsidies to jeepney
operators. Investments into the modernisation of the public transport market will result in
significant reductions of the external costs to society. The biggest financial barrier for fleet
modernisation is the difficulty of the operators to afford the downpayment for a new vehicle (10-
20% of the investment cost). This is largely linked to the fragmented, individualized ownership
structure of the jeepney industry. Based on rationalised fleet numbers, and on estimated cost of
vehicles meeting the new standards, the overall investment required for fleet modernisation is
as follows:

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The DOTr has already started preliminary talks, which are ongoing, to encourage individual
jeepney operators and drivers to form and/or join cooperatives. Options are being considered to
facilitate the jeepney consolidation and introduction of service contracts to
corporate/cooperative operators. Longer timelines for contracts of consolidated fleets may be
introduced as incentive to join cooperatives.

Stringent pre-qualification requirements for fleet management companies needs to be

formulated to ensure that the program is implemented properly and not mismanaged. The pilot
phase of the NAMA will initially focus on existing fleet management companies or cooperatives
to develop and fine-tune possible fleet management structures and business models before the
program is fully implemented in Metro ManilaBased on the experiences of existing fleet
management initiatives in Metro Manila, a fleet management system will be developed including
operational guidelines and business planning. Different organisational or legal models of fleet
management systems are possible based on the existing fleet managers. For instance, the
vehicles could be owned by the operator, who has a service contract with the fleet manager for
maintenance and management of the units. Another option is that the management company
buys existing units and franchises and provides company shares.

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The lack of or wrongly placed fixed jeepney stops currently lead to severe congestion and
inefficiencies of the whole transport system when jeepneys would stop and converge anywhere
along the route to pick up and drop off passengers. Establishing fixed jeepney stops improves
traffic flow, reduces emissions from stop-and-go traffic, and has a positive influence on road
safety.

The establishment and compliance to jeepney stops involves three components:

1. Identifying the strategic locations;

2. Introduction of enforcement mechanisms to ensure that they are followed, and

3. Demonstration of the use and benefits of jeepney stops. Strategically locating jeepney stops
is a scientific process and requires comprehensive data gathering to know passenger origin and
destination patterns. Proper guidelines would also have to be formulated to ensure safety and
prevent choke points of traffic flow. Standard design of the jeepney stops also needs to be
developed.

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Linking an enforcement mechanism to fleet management companies could make its

implementation more efficient through strict adherence to agreed service standards that follows

a schedule when to drop-off and pick-up passengers at particular stops. Management

companies could be liable to ensure that their units adhere to the stops; otherwise, both the

driver and the company would be penalized. Biona (2015) proposes the introduction of a “badge

system” for drivers, which is based on points, which are deducted for every violation, and

excludes drivers from the system if they commit too many violations. This system could be part

of performance-based service contracts as well.

For the pilot phase, priority corridors will be chosen, based on a demand model currently

developed by ITP and consultations with the DOTr. In this regard, in the latest discussion with

the DOTr, route rationalization of jeepneys will focus on those affected by the following

proposed BRT systems being considered according to the schedule of implementation, starting

with Quezon Avenue BRT, then EDSA BRT and lastly, the C5 BRT

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The MRV approach is described in more detail in Section 5. The NAMA is expected to achieve

accumulated GHG emission reductions in the range of 6.5 to 9.2 MtCO2e between 2016 and

2026 in the Philippines (between 3.1 and 4.4 MtCO2e avoided for Metro Manila). This translates

into an average annual emission reduction of 0.65 to 0.92 MtCO2e in the Philippines. Through

these mitigations, the total yearly transport emissions in a) Metro Manila would be reduced by

3.6% and b) nationwide by 2.9%..

Key structural changes targeted by the NAMA include:

• Creation of better policy framework conditions for public transport: e.g. NTP, vehicle standards
for public transport vehicles, scrapping incentives for old jeepneys.

• Building institutional capacities: e.g. the implementation of the direct mitigation measures will
be flanked by capacity building measures following a capacity needs assessment to be carried
out at the beginning of NAMA implementation.

• Re-Organisation of institutional set-up: e.g. establishment of a PTA, strengthening of the

capacity of the Government through the establishment of a TSU

• Facilitation of key sector interventions and investments: e.g. jeepney fleet consolidation and
modernisation in Metro Manila and beyond, introduction of joint fleet management and service
contracts (franchise reform).

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ITEM NO. 3 ASSESSMENT BOUNDARY

Based on the identification of impacts and data availability the following assessment boundaries
are set for the monitoring approach (summarised in Table 19: Assessment boundary). The
quantification of GHG emissions is limited to the direct effects of fleet consolidation and
technological modernisation. The monitoring approach covers tank-to-wheel CO2e emissions
from fuel combustion in jeepneys and buses within the geographical boundary, as well as key
sustainable development benefits caused by the NAMA, including air pollution, accidents, formal
employment and energy consumption.

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The Average Annual Daily Traffic (AADT) represents transport activity in identified routes or
corridors. It is a measure of traffic flow typically derived through hourly traffic counting. The
AADT is commonly used in emission inventories from road-based transport, and to measure
emissions for workstream A, the AADT of all vehicle types are considered to represent traffic
activity in the chosen corridors. The AADT is multiplied by the corridor distance as an

approximate VKT:

Despite the different calculation rationales for baseline emissions of workstream A (based on
routes) and B (based on VKT per unit), the key ex-post monitoring parameters for the emissions
estimates of the NAMA of both workstreams A and B are VKT, occupancy and fuel
consumption. NAMA emissions are calculated as follows:

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As part of the NAMA design phase a detailed monitoring plan, including responsibilities and
processes will be developed with support of the Technical Support Unit. The monitoring plan will
build on the MRV approach and monitoring parameters presented above, but responsibilities
have yet to be assigned. Transport data collection and monitoring are among the mandates of
the DOTr and its affiliate agencies. However, the agency currently does not have a platform for
consolidated transport data that could support GHG monitoring of the NAMA. Instead, such a
database will be built up as part of the MRV activities of the NAMA.

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ITEM NO. 4 OPERATING COSTS

The operator is responsible for maintaining the vehicle. Maintenance tends to be carried out on
a reactive rather than pro-active/preventative basis. The table below shows the estimated
annual maintenance costs identified in the Jeepney Market Study. Industry feedback suggesting
typical maintenance costs of PHP 50,000-65,000 (USD 1,005-1,306) per annum corroborate
these figures.

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The operator income is derived from the boundary payment, as outlined above, supplemented

by a driver income stream in the case of an operator-driver. Net income for the driver is

determined by the remainder of the farebox revenue once the boundary and fuel/lubricant costs

have been covered. The table below provides a breakdown of how the operating revenue is

disaggregated.

Deducting the monthly maintenance and miscellaneous cost from the vehicle rental income
provides the monthly net income of jeepney operators and also driver-operators.

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The new Euro IV jeepney vehicle technology will deliver operating cost savings across all
routes, whilst the electric jeepneys may show savings on the shortest routes. However, these
savings do not take account of the higher vehicle cost and the associated cost of financing new
vehicle investment.

The sector investment requirements have been presented earlier in this section. The financing

requirements are determined by the amount of capital which operators put down towards the

new vehicle. Market analysis suggests that the majority of operators will not be in a position to

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put down more than 5% of the required investment. This is below the acceptable level of

downpayment for most lenders, with even the micro-finance institutions demanding 7%.

Discussions with the national bank DBP have resulted in a minimum 10% downpayment being

considered acceptable. The potential scale of the sectoral financing requirements with a 10%

downpayment are as follows:

At PHP 51.2 billion (USD 1.03 billion) for Metro Manila, the scale of financing required exceeds

that of the sectoral exposure of the major banks. The financing solution is therefore anticipated

to require support from multiple financing institutions. The past discussions with DBP have

tabled the extension of just PHP 1.4 billion (USD 28.13 million), even with the support of SVPCF

funds as a loan guarantee.

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ITEM NO. 5 TRANSPORTATION MODES, MODAL COMPETITION AND MODAL SHIFT

Transport modes are the means by which passengers and freight achieve mobility. They are

mobile transport assets and fall into three basic types; land (road, rail and pipelines), water

(shipping), and air.

1. A Diversity of Modes

Transport modes are designed to either carry passengers or freight, but most modes can carry a

combination of both. For instance, an automobile has a capacity to carry some freight while a

passenger plane has a bellyhold that is used for luggage and cargo. Each mode is characterized

by a set of technical, operational and commercial characteristics. Technical characteristics relate

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 to attributes such as speed, capacity and motive technology while operational characteristics

involve the context in which modes operated, including speed limits, safety conditions or operating

hours. The demand for transport and the ownership of modes are dominant commercial

characteristics.

To support their mobility passengers have several modal options depending on the type of

movement (e.g. commuting, traveling), the concerned distance and modal availability. They fall

into four general categories:

 Air. Air transport services usually comes as scheduled services offered by competing air carriers,

each within their respective networks. Based upon scheduled services posted several months in

advance, a traveler (or someone acting on his/her behalf) will be able to book an itinerary that

may include several flight segments. Charter air services are usually offered under specific

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 circumstances such as seasonal flights towards resort areas or private jets servicing the mobility

needs of a corporation or an individual. They tend to be point to point services.

 Road. Offers a range of motorized and non-motorized options for short distance movements that

a user may opt for depending on affordability, convenience, availability and comfort. The

automobile has emerged as a preferred form of passenger transportation as it offers flexibility and

convenience, but also contributes to congestion, particularly in urban area

 Rail. Intercity passenger services that have been active in many parts of the world for a century

and a half are being expanded by the setting of high speed rail (HSR) services between high

density city-pairs. Another salient form of rail services concern urban transit systems that rely on

specific applications of rail technology. Subway systems are those supporting the densest forms

of mobility in large metropolitan areas. Such systems are usually supported by commuter rail

linking a central station to a network of satellite cities. Light rail transit (LRT) systems are also set

in lower density situations.

 Maritime. The role of maritime transportation to move passengers has substantially declined but

remains important for ferry services. The cruise ship is not used as a form of transportation but

as a touristic option between a network of ports of call.

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 Main Freight Modal Options

To support the mobility of freight several modal options are available depending on what is being

transported, the concerned distance and modal availability. Freight modal options are more

diversified than passengers considering the variety of cargoes which includes raw materials,

parts, finished goods and also food (perishable) products. Unlike passengers, different types of

cargoes often require different conveyances which precludes uniformity.

 Air. Air freight has seen a growth similar to that of passengers, which has been significant. Air

packages are generally carried in unit load devices, either on dedicated freight planes (freighters)

or in the bellyhold of scheduled passenger flights. Heavy loads, such as vehicles, require

specialized cargo planes and are commonly used by the military and for emergency deliveries.

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 Truck. Trucks are highly flexible vehicles able to carry almost every type of cargo over short to

medium distances. Package trucks are commonly used in urban freight distribution since they

carry a variety of cargo (in boxes or pallets) servicing a fluctuating demand. Less than truckload

(LTL) carriers usually consolidate and deconsolidate loads coming from different customers,

which is common in the parcel carrying business. Truckload (TL) transportation carries large

volumes that have been broken down into the largest possible truck load unit; several truckloads

are required to fulfill an order. The variety of modal options is related to the technical requirements

to carry specific cargoes such as bulk, liquids or containers. Trucks using chassis are able to carry

domestic (usually 53 feet in North America) and ISO containers (20 and 40 feet).

 Rail. A unit train carries the same cargo between one origin and one destination, with several

carload configurations possible depending what is being carried. There can be unit trains for coal,

grain, cars or containers; they carry a single commodity. Trains can also be assembled with

different carloads servicing different customers, origins and destinations. This is however more

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 costly and time consuming. Containerization had significant impacts on rail transportation and

spurred the development of intermodal rail services. The first concerns trailers on flatcars (TOFC)

where a complete truckload is loaded on purposely designed flatcar (“RoadRailers” are an

adaptation of this principle). Such modal use has however declined substantially. The second

involves carrying domestic containers on well cars that are also designed to carry ISO containers.

Unit train are common for the transport of containers between large gateways and inland centers.

 Maritime. Through the application of the principle of economies of scale maritime shipping has

developed specialized ships to carry break bulk, dry bulk, liquids, vehicles (RoRo) and even liquid

natural gas. Container shipping has also become a dominant maritime modal option supporting

commercial transactions with multiple origins, destinations and cargo owners. The standard ISO

containers of 20 and 40 feet are the main unit sizes, which has been adapted to carry refrigerated

goods (reefers) and even liquids (tank containers). Still, the dry maritime container is the most

dominant container cargo unit.

 Inland / Coastal. Inland (fluvial) or coastal maritime services are prevalent where there are major

river systems reaching deep inside a continent (e.g. Mississippi, Rhine/Danube, Changjiang,

Amazon), where a country is an archipelago (e.g. Japan, Indonesia, Philippines) or with long

coastlines (e.g. Northern Europe / Baltic, Mediterranean, American East, Gulf and West coasts).

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 In some cases river / sea ships have been designed to link fluvial ports that are separated by an

oceanic mass, such as in Western Europe (e.g. Germany / England). Barges designed to carry

specific commodities (e.g. grain or coal) can be towed along rivers or coasts. Containerization

has also incited the design of specialized container barges that carry container between major

coastal ports and inland destinations.

 Pipelines. Represent a completely separate system of freight distribution where liquids

(particularly oil) and gases can be pumped over long distances. Pipelines can also be used to

carry small quantities of freight, namely through pneumatic tubes (e.g. documents). A few systems

using pneumatic tubes to collect wastes have also been implemented.

Because of their operational characteristics, freight transportation modes have different capacities

and

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efficiency levels. While trucks are certainly the mode which has the least capacity, they have a

level of flexibility (speed and door-to-door services) unmatched by rail, maritime and fluvial

transportation. Intermodal capacity in TEU for trains and trucks depends on the type of container

being carried with a 53 foot container the equivalent of 2.65 TEU. The capacity of air cargo

transportation is more complex to assess since about 50% of the global air cargo is carried inside

the bellyhold of standard passenger planes. Further, older passengers planes are converted into

cargo planes to extend their commercial life. For instance, a 747 passenger plane can carry 8 to

12 metric tons in its bellyhold and these planes are being retired with some converted to cargo

only services. A dedicated 747 freight plane can carry 100 metric tons or more depending on the

freight density and range.

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ITEM NO. 6 ANNEXES

Annex 1: Description of Alternative Vehicles In the NAMA scenarios, specifications of alternatives

were identified from selected studies and existing information. The city buses assumed for

Component A were based on models already running in Metro Manila. The alternatives for

Component B, on the other hand, were based on derived values of the jeepney market

transformation study by Biona.

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Policy makers should define the land use plan and its institutional setting in close relation to the

tools defined in the World Bank Guidance Note series on tools for effective pollution management.

The land use plan should also be defined in relation to the following tools pertaining to

governments:

 Setting priorities, a process that consists of determining and stating a national-level framework

for integrated land management, as well as determining and stating the national government’s

perspectives regarding key land uses and decisions.

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 Environmental Assessment, to ensure that the land use plan requires developers to conduct

these assessments and incorporate those conclusions into their projects prior to planning and

construction approvals.

 Strategic Environmental Assessment, so the land use plan is subject to this type of assessment,

and so the land use plan incorporates all of that assessment’s policies and measures.

 Industrial estates, to guarantee that the land use plan incorporates the lands, procedures,

practices, and regulations associated with the establishment and operation of industrial estates.

 Environmental Regulation and Standards, Monitoring, Inspection, Compliance and

Enforcement, in that the plan and zoning code include all relevant standards.

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 Market-based instruments and taxation policies, to ensure that the planning authorities

incorporate and effectively apply the numerous land management instruments mentioned in this

Guidance Note in order to formalize policies and procedures, and bring about a more equitable

land market.

The

Colombian municipality of Soacha, located south of Bogotá, suffered from a disordered system

of land uses. In 2007 a group of development promoters became convinced that, if used properly,

traditional land development resources such as easements would be able to finance urbanization

in Soacha with the highest standards in public space, roads and infrastructure, community

services and, of course, housing. Ciudad Verde emerged after a two-year process of negotiation

involving promoters and local and national authorities that allowed assembly of 328 hectares and

administration of the public funds generated by the project. It will include a network of roads,

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pedestrian paths, bicycle paths, environmental protection areas, water bodies, and canals,

consisting of 55 hectares, or 16% of the area. Concerning land use planning, Bogotá issued Law

388 in 1997, which mandated the fair distribution of the costs and benefits of development

throughout the areas where it was to take place. The law also granted the category of public

function to the entire urbanization process.

Conflicting Policies

Conflicting policies at the federal level and below do not make the integration of land use and

transportation planning any easier. Though federal legislation such as TEA-21 and the CAAA

indicate that there is a need to assess the impacts of transport infrastructure on land use

patterns and subsequent induced travel demand and air emissions, there are other

requirements that are in direct conflict. For example, the alternatives analysis for highway

projects that seek federal funding are required to hold land use fixed across the alternatives for

a specific highway corridor, directly denying any possible impact of the alternative corridor

transportation infrastructure on land use. Presumably this restriction is imposed to reduce the

burden of monitoring whether local planning agencies are ‘cooking the books’ to shift land uses

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in ways that would be more supportive of the need for the transport project they desire to

implement. But clearly this contradicts other federal policy and undermines the capacity

of local and metropolitan activity to promote integrated land use and transportation

planning.

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 After automobile usage rapidly spread in the early 20th century, parkways appeared as roads desig-

nated for automobile use only. This was done to

allow automobiles to travel at higher speeds than horse-drawn carriages, as exemplified by the devel-

opment of the Long Rheinland State Parkway in the 1930s.8) Parkways later began to spread throughout

the world in various forms, such as national park roads and pay roads through scenic areas. Ameri-

can-style parkways were soon introduced into Japan, starting with the Shonan Coast Park Road

(now part of National Highway Route 134), which began construction in 1931 and was completed in

1936, as the first parkway in J

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ITEM NO. 7: ECOLOGOCAL MITIGATION AND ECO-ROADS

Construction planning belongs to the road construction phase and covers the drafting of the documents required

for construction. In many cases, the contractor is often responsible for drawing up the construction plan. Within

limits of the final engineering plan, interaction between road constructors and landowners and other concerned

parties continues throughout the entire planning and construction phase. In minor projects, the final engineering

and construction planning phases can be combined. Compensation is paid for any damage caused to external

property during final engineering or construction planning and construction.

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Capacity

Roadway widening is necessary where traffic signal timing and access management are unable to provide

enough capacity for heavy traffic volumes. Some segments may improve in the short term with optimized

signal timing, but may ultimately warrant additional capacity through widening. Widening could include adding a

through lane for a long section of road, or providing turn lanes at intersections. Capacity improvements on I-49

(widening) and designing urban interchanges to accommodate anticipated traffic continues to be a priority for

the region.

Interchanges, as points of access and egress and / or changes of direction in freeway systems are the

significant points of turbulence and decision-making in freeway

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ITEM NO. 8 CONGESTION MANAGEMENT STRATEGIES

Incident Management

Non-reoccurring congestion based on traffic incidents (crashes) can account for up to 25 percent as the source

of congestion. Incident management plays a large roll in reducing delays and secondary incidents. By

identifying incidents early and having quick responses from tow trucks available in close proximity that may be

stationed or roving, clearing of incidents helps traffic return to normal operations as quick as possible.

Safety Projects – Roadway Departures, Grade Separated Bicycle and Pedestrian

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Crossings

Safety projects reduce crash rates and the severity of crashes. The region should continue to deploy rumble

strips as needed, cable median barriers, enhanced signing at curves and high friction pavements to reduce

crash rates on the CMP network.

Additionally, two Razorback Regional Greenway trail crossings have been grade separated (MLK/Hwy 180,

and S. Walton Blvd./Hwy. 71B) on the CMP network which improves the safety and reliability of both systems.

AHTD is installing approximately 600 miles of cable barrier installations statewide. Within the MPA, AHTD has

installed approximately 46 miles of cable barrier with 24 miles of cable barriers along I-49 between Fayetteville

and Bentonville (Table 8.2). The safety project was completed in 2012 between Fayetteville and Rogers. AHTD

reported that from 2007 to 2011, before the cable barriers were installed, there were 17 serious median

crossover crashes that resulted in 10 fatalities along I-49, an average of two fatalities per year. In areas where

I-49 is being widened, a concrete barrier wall will preplace the cable median barrier.

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Capacity

Roadway widening is necessary where traffic signal timing and access management are unable to provide

enough capacity for heavy traffic volumes. Some segments may improve in the short term with optimized

signal timing, but may ultimately warrant additional capacity through widening. Widening could include adding a

through lane for a long section of road, or providing turn lanes at intersections. Capacity improvements on I-49

(widening) and designing urban interchanges to accommodate anticipated traffic continues to be a priority for

the region.

Interchanges, as points of access and egress and / or changes of direction in freeway systems are the

significant points of turbulence and decision-making in freeway.

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ITEM NO. 9 PLANNING AND CONTROL OF FUTURE SYSTEMS

In attempting to take a long run, global perspective of transportation systems development,

one is struck not only by how much has been accomplished in the twentieth century, but

also by differences in transportation development among various world regions. When

visiting large, rapidly developing regions, such as China and Russia, one wonders whether

they will avoid the transportation development mistakes of regions that were principal

innovators, such as the United States, Western Europe, and Japan. If so, what knowledge

and resources will they require, and how should they go about obtaining it? Knowledge

development generally occurs through research by institutions of higher education and

professional experts. Acquiring resources for transportation development requires an

estimate of future benefits and costs, which themselves require the best available forecasts

of use levels and costs of system implementation and operation.

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ITEM NO. 10 ROLES AND EFFECTS OF TRANSPORTATION SYSTEMS

As documented in the ten articles in this topic, transportation systems have pervasive and

extensive effects on the economic and social systems that they serve. Although it is

common to describe the use of transportation services as a derived demand, the way in

which transportation modes are provided has an enormous effect on society itself. The initial

effect of the introduction of a new transportation mode or service is generally to reduce

travel or shipment times and costs, whether the mode or service is an existing technology or

a new technological development. But this is only the first step in the

“two-step dance” (see also Historical Transportation Development). The second step

occurs when “innovative folk think of ways to do new things using the newly created

services: entirely new market niches are uncovered, or old ones significantly expanded and

remolded.” As a result, mobility may be increased, and spatial interaction and trade

expand. Finally, opportunities for economic and social integration may occur. The history of

technology development in transportation is replete with examples of the effects of such

innovations, many of which are described in this topic and in Historical Transportation

Development.

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Despite their positive effects, transportation systems also can, and often do, have large

negative effects on the economic and social systems they serve. One of the most pervasive

effects is that of traffic congestion in all levels and types of transportation services.

Congestion of transportation systems occurs when the demand or use of the system brought

forth at the given generalized cost (time, money, risks, etc.) is excessive compared with the

system’s capacity or the supply of services available. Congestion is effectively the wasted

time and expense of using an inadequately supplied

transportation service. However, congestion also serves to bring the system’s use into

balance with its available capacity. Since transportation services, such as highway

systems, do not always have an active supplier, so the interplay of use and available

capacity may not be described well by the classical demand-supply model of

microeconomics. Instead, the supply may be fixed for the present, and pricing mechanisms

may be absent. Some economists and others advocate that pricing should be invoked in

such situations to dampen demand. However, pricing of transportation services impacts

various socioeconomic groups and travel and shipment purposes differently. Therefore

invoking transportation pricing may not manage demand in the way that advocates believe.

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ITEM NO. 11 OBJECTIVES

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