2023 Volume 79 Issue 20 Article ID: 23-20046
In Japan, the stock effect of social infrastructure development is traditionally measured in terms of user benefits defined in the Cost-Benefit Analysis Manual. However, recent studies have adopted the Spatial Computable General Equilibrium (SCGE) model to analyze the distribution of these effects. Unlike most approaches that assume a perfectly competitive market, the UK Department for Transport employs the Wider Economic Impacts (WEIs) framework, which considers an imperfectly competitive market and captures additional effects beyond conventional cost-benefit analysis. In this study, we specifically focus on agglomeration benefits among the various benefits encompassed by the WEI framework. To investigate the impact of market competition assumptions on benefits, we develop two models: one utilizing the SCGE model assuming perfect competition and the other incorporating monopolistic competition. By comparing the benefits calculated by each model, we examine the extent to which assumptions like increasing returns and diversity preference influence the benefits derived from reduced transportation costs. Our findings reveal that these assumptions account for approximately 20-30% of the benefits measured in a perfectly competitive market.
