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• ## Re: [carfree_cities] Re: An Argument for Fee-based Roads (long)

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• Prometeus57 wrote a great post. Robert, yes, sunk costs are the initial fixed costs for the infrastructure. Marginal cost, in pure mathematical terms, is the
Message 1 of 40 , Apr 5, 2002
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Prometeus57 wrote a great post.

Robert, yes, sunk costs are the initial fixed costs
for the infrastructure.

Marginal cost, in pure mathematical terms, is the
first difference of cost (there are also second
differences and higher, but just the first difference
is fine).

Marginal cost is the cost of producing one more "item"
(one book, one donut, one subway ride, etc.) Usually,
you can take total cost for producing N+1 items minus
total cost for producing N items, and that is the
marginal cost.

But with transportation, which is labor-intensive, you
should probably choose to allocate labor at the
passenger level, and thus include it in the marginal
cost (pretend labor is paid by the passenger rather
than by the hour). If you don't include it, marginal
cost is practically zero, as it would only be a small
amount of additional diesel fuel or electricity to
carry around one more passenger.

You could also look at the marginal cost of additional
routes in an already existing system -- marginal cost
of a route, as opposed to marginal cost of a
passenger. For example, creating skip-stop or express
trains on existing track that currently runs local
rolling stock (the trains), and possibly signal

Finally, you could also include 7% of the fixed cost
in your "variable" cost (interest on the fixed cost).
This is necessary for a private business in a
competitive market to price its products, since it
must pay the fixed cost somehow. For example, with
airlines, to stay afloat the average fare needs to
cover labor and fuel (marginal costs), and for the
aircraft, the lease payments, or depreciation plus
interest expense or opportunity cost if not financed.

--- Robert Hines <robhines@...> wrote:
> > What's wrong with your argument? It assumes that
> sunk costs should be
> > paid for in the exact same way that marginal costs
> are paid for. And
> > in fact they shouldn't because they can't.
>
> I'm a first year student, so could you clear
> something up for me before
> I give opinions based on confusion. When you are
> costs, you mean fixed costs for the initial
> infrastructure? And marginal
> costs derived only from the portion of variable
> costs, not total costs,
> used to provide service for one customer? From my
> understanding of what
> marginal costs are, they include both fixed and
> variable costs.
>
> Rob Hines
> 108814008
> robhines@...
> 100 Riverdale Drive
> Sydney NS B1R 1P4
>
>
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• ... I m with you up to this point. ... We ve had more than enough experience with elevated transport systems to decide right now never to build another one of
Message 40 of 40 , Apr 8, 2002
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Louis-Luc said:

>It's relative...
>Knowing there is an environment spoiled with cars, and
>an underground city filled with life (Montreal Underground Network), I
>prefer the subway way over the
>bus, because you can ride it and walk through the underground city for hours
>(or repetedly for days), without knowing cars even exist.
>
>However, in a city with no car, or where car drivers yield to human-powered
>traffic both in theory and 100% in practice, then streetcars or buses become
>much more attractive, because you don't have the stress of walking through
>car traffic when you ride them and walk in the city.

I'm with you up to this point.

>The ideal is a monorail:
>- it runs in the air (over street level) NONONONONONO!!!!!
>- it frees the street for human uses true
>- when you ride it, you see outdoors, true, but not at eye-level
>but I think it's more vulnerable to the weather than a metro. probably so

We've had more than enough experience with elevated transport systems to
decide right now never to build another one of the damn things. It's
true that newer technology is better in this respect than older stuff,
but it will never be acceptable. (Well, ok, some breakthrough in materials
that allowed the construction of spider-web thin supports for the tracks
(or whatever) might change the picture somewhat, but it still is not
the right way to do it. If you need above-ground transport, trams are
the way to go. If there's too much traffic from the trams to be acceptable,
then you HAVE to build a metro, no matter what the cost. If there's that
much traffic, the cost is not unreasonable (per rider).)

-- ### --

J.H. Crawford Carfree Cities
mailbox@... Carfree.com
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