Intelligent transportation systems: An economic and Environmental policy assessment

This paper discusses the congestion relief and environmental impacts expected of Intelligent Transportation Systems (ITS) based on a qualitative assessment of the incentives generated. It uses theoretical and empirical results from the literature to evaluate the private and externality impacts of Advanced Traveler Information Systems, Automated Highway Systems and Intelligent Transit Systems and discusses the appropriate role of the public sector in their development based on these impacts. It is argued that although ITS are intended to improve system efficiency, the technologies may, in fact, exacerbate the existing, economic inefficiencies in the surface transportation system and that policies to correct these inefficiencies become all the more crucial as the paper considers implementation of ITS. Several policies that target environmental externalities are discussed as possible complements to ITS.