Is Mandatory Project Evaluation Always Appropriate? Dynamic Inconsistencies of Irreversible and Reversible Projects
Bibliographic Data
| ID | 13037259 |
|---|---|
| Authors | Tatsuhito Kono (0000-0001-5932-020X, Tohoku University, corresponding author), Hiromichi Notoya (Yokohama City University) |
| Year | 2012 |
| Volume | 3 |
| Issue | 1 |
| Pages | 1-31 |
| Publication date | 2012-01-25 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Benefit-Cost Analysis (JOURNAL) |
| Journal identifiers | ISSN: 2152-2812 • E-ISSN: 2194-5888 |
| Publisher | Cambridge University Press (CUP) (PUBLISHER) |
| DOI | 10.1515/2152-2812.1072 |
| OpenAlex | W1511856528 |
| Language | EN |
| References cited | 12 |
Benefit-cost analysis (BCA) is used to optimize investment in public projects. Indeed, in many countries, BCA is mandatory for provision of most public services. However, once BCA is mandated, residents can strategically alter their behaviors based on a dynamic inconsistency that the BCA-based optimal service level depends on residents’ behaviors. This paper discusses this dynamic inconsistency problem, taking transportation services as an example. We show that the problem may decrease both social welfare and the utility of residents as compared with the first-best case, and that the occurrence of second-best outcomes depends on the reversibility of the project and the general-equilibrium interdependency with another project
Business · Cost–benefit analysis · Economics · Environmental economics · Interdependence · Investment (military · Microeconomics · Political science · Public economics · Risk analysis (engineering · Service (business · Social Welfare · Welfare · Economic and Environmental Valuation · Economic Policies and Impacts · Fiscal Policy and Economic Growth · Marketing
| Citation velocity | historical |
|---|---|
| Highly cited | No |