INFRASTRUCTURE TAXES, INVESTMENT POLICY, AND INTERMODAL COMPETITION FOR THE TRANSPORTATION INDUSTRIES

Recent deficit reduction proposals have included the suggestion that infrastructure taxes be substantially increased to finance the deficits as well as to rehabilitate the nation's deteriorating transportation infrastructure. As such, the economic consequences of changes in tax policy involving transportation infrastructure are important managerial and public policy considerations. Governmental promotion, subsidies, and user taxes are also generally thought to be important determinants of intermodal competition and resource allocation. The present study provides a market-based methodology to empirically determine the net economic effects of a major highway user tax-infrastructure improvement ''package'' on the competitive balance between the trucking and rail industries and on the competitiveness of different types of motor carriers. Based on the findings, the economic implications for management and future public policy actions are presented.