Ocr F584 Transport Economics January 2010 Exam

Hey,
I don't think the text book provided by ocr is very good when explaining certain concepts. It seems to often contradict itself.
I was confused about franchises. It says that the purpose is to promote competition, however it then goes on to say that the winning franchise holder will be given the benefit of no competition. How can this be promoting competition if there is no competition?

I think the purpose it to promote competition when applying for franchise, but then whoever wins the bid has benefit of no competition? if that makes sense? im not entirely sure though i was a bit confused aswell.



Some points i was confused about:
On specification:
-'understand nature of, and influences on, firms revenues'? - I dont understand this, is it just a general statement?
Only statement i could find in the textbook was 'LRAC fall due to an increase in size of vehicles, consequently their so called payload, the revenue-producing load increases'??

-Impact of deregulation: Why is the result 'decline in bus passenger numbers', 'increased car ownership' etc?
I know it was hoped for that fares would be lower, efficiency increase etc but the hoped for benefits failed to materialise. Why was this???

-Is PFI/PPP the same thing?

-I know PED inelastic/elastic etc. and how it effects demand and YED higher income go for certan types of transport etc - but do we need to know all the values like YED, XED and the numbers like we did in first module at AS? - i havnt learnt these yet so hope not! ??

-What are people using as there example of a monopoly? Network Rail is an example of a natural monopoly but do you have any other transport examples?

-'explain effects of increased demand for road and air transport on the environment'
I know the neg externalities such as noise, accidents, congestion etc but its only really the pollution that affects the environment? Do you just say due to issue of climate change, demands on energy, raw materials, space overwhelming etc - and uses non renewable sources which aernt sustainable etc?

-'analyse why existance of negative externalities is a case for market failure'
Is this literally just where free market is failing to produce best use of scarce resources and inefficient allocation of resources? What else would you say?

-'Discuss impact on UK towns and cities and elsewhere in the world where road-pricing schemes have been implemented'
-'Disuss using case studies of developed and emerging economies, how other countries have sought to deal with the problems of urban traffic congestion'
What is the different between these two?
The case studies i have are Singapore, Durham in UK, Norway-Oslo,Bergen, Australia-Melbourne from the textbook. Could i answer about writing about any of these for either of these two questions??


If you can help on any of these would be grateful.
thank you

by "understand nature of, and influences on, firms revenues" I think it just simply means knowing what a firms revenue consists of and what factors influence a firm's revenue

impact of deregulation - in theory it works; it increases competition, increases supply, increases output, decreases costs/prices, and this applies in reality to a certain extent. However the determinants of demand need to be considered, and price did not fall enough relatively compared to the cost of car use for there to be a switch in demand from car to bus, as well as other determinants, incomes (rising), tastes + preferences (car use is the norm), convenience (cars provide a door-to-door service), flexibility (buses run on timetables not as and when you need them), ownership (if you have a car you may as well use it), accessibility (lack of bus stops)

PFIs (Private finance initiatives) are the methods to provide funding for PPPs (Public-Private partnerships). The PFI is the funding the PPP is the actual relationship/scheme between public and private.

They shouldn't ask you to calculate PEDs etc, based on past papers and the specimen, however "prior knowledge is assumed" so they could test it if they like due to the fact it's covered at AS, so do learn them

A natural monopoly is an example of a monopoly so you could use that as a valid example if asked, however you could also mention the routes themselves (except 'open-access' routes) become monopolies once franchises have been tendered, e.g. Virgin Trains service Manchester -> London, is a monopolistic route until the franchise comes up for lease again.

Yes, you can state the lack of non-renewable resources which would be depleted, and also noise pollution, air pollution, visual intrusion, congestion, stress and accidents, but also the use of land. There is limited space to build on and so land, the scarce resource it is, would be used up. There is an opportunity cost, would the land have had a better use?
You can also say the divergence between the MPC and MSC will increase due to an increase in external costs

Yes, define market failure and say that the full social cost is not being paid for the goods/services that cause negative externalites, due to insufficient information on the magnitude of the neg. externality. Consumers only account for the private cost. There is over consumption/over production of the good/service.

Examples that could be used: London, Singapore, Stockholm, Durham
In general the numbers of cars on the road has decreased in these areas. The systems vary, London uses number plate recognition and a fixed fee; Singapore a 'tag and beacon' system (a pay machine in the car is deducted funds when entering congestion zones) the fee is variable dependent on the day and peak/off-peak hours; Stockholm uses a similar system to Singapore but also uses ANPR like London (Automatic Number Plate Recognition); and Durham uses a barrier to close off a stretch of street in the centre a fee is paid to enter the stretch of road, it has affectively made turned the road into a pedestrianised area.
Evaluate the cost implications of such schemes, for example London spends 50% of generated income on admin and policing.
You can also say that driving has become more pleasurable and visitors enjoy less noise and air pollution. However schemes could deter business activity from the area and reduce domestic and international competitiveness.

For the second of those two questions you would simply write about the schemes, how they work, how they compare (variable/flat rate - offpeak/peak etc) whereas the first is more detailed including external costs/benefits.

I hope that has helped

Thank you so much!!
I might have a few more questions on the last chapter when ive finished revising that, but other than its just mainly memorising and learning everything and past papers

are you taking this exam? or are you a teacher?

hows everyone elses revision going?

I'm taking the exam and I think everyone's revision is going okay but it's all a but rushed and last minute lol

Hi, yeah a couple of other points i was confused about:

'Discuss how the cost-benefit approach compares with private sector methods of appraisal'
'Comparison of cost benefit and commercial approaches'

What are these private sector methods? I only know about CBA??
I know its been improved to cover Environmental Impact Assesment but this is just a modification right? So im not sure what the other policies are?

Would the private methods not just mean firms making decisions based on private costs and benefits?

Does anyone know the difference between 'road pricing', 'road user charging' and 'congestion charging' ??

in the 35 mark essay do the ask a question from chapter 4,5,6 or can the choose anything? and also how do you answer those 20 markers! i mean the 15 mark bit is just explaining but once uve explain you cant really use the same graph again