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Über dieses Buch

This book shows the necessity of measuring the incidence-basis indirect economic effects of public investments. The essential argument can be traced back to H. Mohring versus J. Tinbergen, the conclusions of one contradicting those of the other. Their arguments are called, respectively, “transfer” and “existing theory” of the indirect economic effect of public investments such as highways.

The author has first defined the categories of “generation-basis” and “incidence-basis” economic effects in addition to the categories of direct and indirect economic effects, and has shown that it is essential to measure the incidence-basis indirect economic effects for decision making about public investments. The second major point is that, in this sense, the measurement must rely on the general and dynamic spatial modeling simulation approach. The third essential point is that Tinbergen is correct as far as we have to cope with a real setting in which the Marshallian type of external economies exists.

Another characteristic is that the monetary (pecuniary) external economies are dealt with systematically, for the superiority of public investment criteria depends greatly on whether they are taken hold of or not. This book lays emphasis on the process toward the equilibrium, not the equilibrium itself.



Chapter 1. Definition of Economic Effects, Necessity of Measurement, Prototype Model, and Externalities

In this chapter, we are investigating economic effects brought about by public investment, especially theory and measurement of indirect economic effects.
Hirotada Kohno

Chapter 2. Time-Saved Evaluation and Social Discount Rate

The direct economic effects such as saving effects of the running costs and saving effects of the time required are formed owing to the influence of the newly constructed expressway, the most part of which are “saved benefits,” so easily measured and of clear notion. But, the saved effects of the time required are in terms of physical unit of hour and minute, which must be converted to these in terms of money so as to add up the other various effects together. What acts as intermediary to this conversion is the “monetary evaluation rate of the saved time” (below, based on [12], [10], [11], etc.).
Hirotada Kohno

Chapter 3. Perfect Transfer Theory of Indirect Economic Effects Formation: Based on the Generation Base vs. Incidence Base

As to the formation of indirect benefits (≒economic effects), there are the transfer theory and the independent existence theory; apart from the former “transfer theory,” we call the assertion that does not utterly admit independently existing indirect benefits to be “perfect transfer theory.” Here, we intend to elucidate this assertion invoking the notion of generation base vs. incidence base, etc. (mainly, see [1]). About the independent existence theory, we treat it later.
Hirotada Kohno

Chapter 4. Independent Existence Theory Forming Indirect Effects and Its Three Examples: Congestion Easing, Scale Enlargement of Factory·Warehouse, and Marshallian External Economies

I cannot, by all means, cast my lot with the transfer theory that all of what is called to be indirect effects is nothing but having transferred from the direct effects (the user himself forms those (a) by himself, (b) on the expressway, and (c) instantaneously), although I consent to the ordinary transfer phenomena of course (see the foregoing chapter).
Hirotada Kohno

Chapter 5. Formation Process of Marshallian External Economies: Number 3—Technological and Marketable Propagation/Diffusion of the “Technological External Economies”

So far, in Table 1.​2 of the marketable ≒ monetary ≒ pecuniary external economies: Number 1 and in Fig. 4.​2 of Number 2, in which the case where has not the technological external economies induced at the stage on the way is taken up, contrarily here as the Number 3 of the marketable external economies, the case where there exists the technological–marketable external economies induced at the stage on the way comes to be the main subject; that is, which is the analysis as to k a1 → k a2, k b1 → k b2, k c1 → k c2, k d1 → k d2, and subsequent price fall (p 1 → p 4) β (hereinafter, see Kohno [1], pp. 8–29); for the price p 4, see note (4) of Fig. 5.1).
Hirotada Kohno

Chapter 6. Social Costs and the Measurement

Concerning social costs, in Japan, many disputants have already argued, so the terminology of social costs has been used generally.,
Hirotada Kohno

Chapter 7. Measurement of Evaluation Rate of Public Pollution (Noise)

Generally, the more realistic, complicated policy decision-making problems have, the more objectives. For example, the road construction project has the objective to contribute to the effective development of the national economy/regional economy and at the same time to contribute to the preservation of natural environment/living environment, especially recently (hereinafter, depending on [1], [3]).
Hirotada Kohno

Chapter 8. Criteria of Benefits Valuation—Remained vs. Transferred, and Generation Base vs. Incidence Base

Here, the criteria of valuation of direct effects and indirect effects are argued, with the theories of technological external economies and pecuniary (monetary) external economies as among the bases. [8] (1952) of J.E. Meade, and [10] (1954) of T. Scitovesky are those.
Hirotada Kohno

Chapter 9. Verification of Independent Existence Theory Depended on the Market Equilibrium Model: Based on the Great Discrepancy of the Benefits in Generation Base vs. the Benefits in Incidence Base

Jan Tinbergen’s, “The Appraisal of Road Construction: Two Calculation Schemes [18],” that appeared in RE & Stat. on August 1957, which gave us a great profound impression, coincided with the mentality of the times when we are about to study on the real economic research of expressways, right on the heels of Report on Kobe–Nagoya Expressway Survey (for the Ministry of Construction, Government of Japan, August 8, 1956, 188 pp.) by a group of experts headed by Ralph J. Watkins. (10 months later, the introductory paper of [18] by Yukihide Okano came out in the periodical: Expressways, Express Highway Research Foundation of Japan.)
Hirotada Kohno

Chapter 10. Generalization of Technological Propagation/Diffusion Externalities Based on the General Equilibrium Model of Formation Process of Marshallian External Economies: Number 4

As mentioned in the Sect. 8.​1.​1 of Chap. 8, we have treated selectively the independently existing indirect economic effects, different from the transferred effects from the direct effects. In Chap. 9, we have coped with the task that the following “two” will coincide with each other (transferred effects ≒ indirect effects) or come to be incidence base effects > transferred effects, and then the independently existing theory can be proved, in the form of contrasting the effects in generation base (this is the direct effects) with the effects in incidence base (which include the pure indirect effects existing independently except the transferred effects). This is, so to speak, that we have tackled on the “existence demonstration” concerning the pure indirect effects which exist independently. This chapter is based on [17], [10, pp. 57–63], [11], [13], [15], etc.
Hirotada Kohno

Chapter 11. Closing Paragraphs—On the Occasion of Closing This Volume: Economic Effects Theory and Measurement

As aforementioned, on the occasion of closing this volume of the Economic Effects of Public Investment, let me say a few words. Looking back through all the Chap. 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10, I am fully or in some sense satisfied, for so far there has been no chance of putting my thoughts together systematically in such a style that is different from the series, New Frontiers in Regional Science: Asian Perspectives, volume 2: : Using an Interregional Input–Output Programming Model [14], for which the chance to write a survey paper has occurred two or three times. So, until having finished, I cannot expect to cover all the details of Volume 1.
Hirotada Kohno


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