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Generally speaking, externalities occur when a decision causes uncompensated costs or benefits to individuals or groups other than the person(s) making the decision. Examples of negative externalities are numerous in the area of the environment and natural resources. Some negative externalities result because a particular type of manufacturing technology is used (e.g. water and air pollution caused by industry). Other negative externalities occur because of the transportation system (e.g. air pollution caused by intensive car traffic). Though positive externalities draw less attention than negative externalities, their existence is obvious, for example, beekeepers who provide unpaid pollination services for nearby fruit growers or the positive network effects of a telephone system. The more people who own a telephone, the more useful the device is for each owner ().

In this chapter the regional economic impacts of road pricing on cars are analysed taking into account externality effects from transportation on wages and productivity. The direct impacts from changes in transport costs on level of wages and productivity (the direct externality effects) have been estimated. The direct and derived economic impacts of road pricing have been evaluated using the sub-regional economic model LINE. The direct effects on level of wages and productivity have been included in the model together with all the direct effects on commodity prices from road pricing. The total impacts of road pricing have been subdivided into three components: 1) The wage effects of reducing income net of commuting by increasing transport costs with introduction of road pricing, 2) the labour contraction effect arising from increasing wages through increases in commuting costs and 3) the negative productivity effects of introducing road pricing. In total the impacts of road pricing are substantial. Regions with high level of average commuting costs (suburban areas in Greater Copenhagen) suffer most, whereas the centre of Copenhagen suffers least because of short commuting distances. In rural areas impacts are on or just below the average because of low levels of road pricing.

Traffic congestion is an important example of an external effect. Economic analysis of this phenomenon dates back to the first half of the twentieth century with the seminal contributions of Pigou and Knight. The Pigou-Knight model still remains an important tool for the analysis of congestion. It is the purpose of this contribution to provide a brief discussion of this canonical model and to introduce two extensions. The first concerns the derivation of the travel cost curve, which is considered as an exogenously given relationship in the standard analysis, from a theory about speed choice. The second concerns the incorporation of heterogeneous traffic into the model. The results of the analysis are illustrated by a numerical example.

As far as we know, the problem of existence of a maximiser of the welfare function in traffic congestion models Mohring and Harwitz has never been posed. In this chapter we present a mathematically rigorous existence result and take the opportunity to provide a similar variant of their self-financing result.

Cohesion between city and surrounding area is essential in the metropolitan landscape. However, this relationship is under strain. Firstly, the infrastructures, which are difficult to cross, are concentrated in exactly the transition zones of city and countryside, where — certainly for cyclists and pedestrians — the surrounding area is often difficult to reach from a residential area and vice-versa. Secondly, road users in the surrounding area are confronted with the loss of local connections because railways have been cleared of intersections or because new main infrastructure has been built. Current government policy considers this situation, but, in actuality, the focus is still too one-sided concentrating on construction costs and (railway) safety. A modification of this policy and a certain protection of local connections (including provisions for pedestrians and cyclists) within the framework of town and country planning are urgently needed. Because of the current developments, the metropolitan landscape is in danger of being divided into small ‘compartments’, which will only be connected by long indirect routes. A more integral approach and establishment of close-knit structures in Regional and Provincial Traffic and Transportation Planning Schemes can offer guarantees for more cohesion in the lowest categories of the road and path network.

Regional disparities resulting, above all, from lasting disproportional location of industrial capacities, have shaped Slovakia’s development in recent years. The goal of the chapter is to map regional employment differentiation in the SR, according to high-tech and low-tech manufacturing sectors. To achieve this we worked with recent regional statistical data. We concentrated on this question: Does there exist a substantial relationship between location of high-tech manufacturing and employment growth in selected regions. According to our survey, the high-tech sector did not prove to have strong impact on total employment. However, considering the changing structure of manufacturing in the future, it will represent one of the most decisive issues concerning competitive growth.

The European Union pays attention to the problem of persisting technological gap vis-à-vis USA and Japan. The Slovak Republic, similar to other EU members, shows lower ability to transform knowledge from basic research into new products and this has had negative impact on employment and growth. Emergence of clusters can assist to qualitative changes in functioning of the Slovak business sector, which has been for many years characterized by large-scale production. This situation changed during the 1990s. A transition process, generated by the Velvet revolution in 1989 and the liberalization of Slovak markets, initiated a restructuring process among Slovak enterprises coupled with an emergence of small domestic firms and foreign direct investment (FDI). The chapter reflects this process and focuses on the main element of it — automobile sector. It addresses emergence of Slovak automobile cluster(s) as a main topic.

The article presents the main aspects of interaction between network externalities, IT market, and e-commerce development under conditions of a transition economy. In literature it has often been found that network externalities cause a decrease of what is generally called transaction costs (costs of gathering information, controlling, coordinating transactions). With respect to the decrease of transaction costs, this chapter shows that network externalities are extremely relevant for the Lithuanian IT market.

An important aspect of globalisation is the strong growth of international trade. What is striking is that the trade in final products is more and more dominated by the trade in parts and components. Because of new production techniques, better means of transportation, and the worldwide breakdown of tariff and non-tariff barriers, industrial firms are increasingly able to outsource part of their production process to cheaper producers or locations in foreign countries. Although this internationalisation of the production process is a universal phenomenon, it seems particularly relevant for the Netherlands. This country is not only one of the world’s most open economies, but is also too small to reap all the scale economies of keeping the entire production chain within the domestic borders. It suggests that the presence and consequences of international outsourcing are especially apparent in the Netherlands. Since outsourcing of production (whether it is international or not) decreases average production costs, in a competitive environment, it leads to lower consumer prices and, therefore, increases economic welfare. Nevertheless, the international debate on outsourcing focuses on its possible negative side-effects. It is argued that outsourcing decreases national employment and particularly harms the labour market position of unskilled workers in Western countries. International outsourcing may also reduce industrial production, and thereby undo the positive externalities that result from a vital industrial sector. In this chapter, we try to quantify the amount of internationally outsourced production by the Dutch industry. Since there are several measurement problems, we apply more than one method and use different statistical data bases. Our focus is on the period 1987–2003.

This chapter contributes to the expanding body of literature on knowledge, learning, innovation, clusters, networks and space. In most publications the main argument is that today’s economy can be best characterized as a knowledge based economy. In other words, learning and knowledge are the key to innovation and improving competitiveness. At the same time, firms depend on collaboration in networks to access knowledge beyond their control. In fact these networks are argued to have an important spatial dimension.

One of the main criticisms of these publications is that it may represent some very interesting theoretical views, whereas at the same time the empirical support for these views is very poor. In this chapter we try to answer that criticism as it presents a case study of inter-firm collaboration on innovation in a certain region in the Netherlands. The theoretical part of the chapter is not very elaborate, because we have put an emphasis on the empirical side. In the chapter the relevant literature is only dealt with to a certain extend. We assume that most readers will be more or less familiar with what can be referred to as the established literature. Instead, the chapter focuses on the representation of a case study. In such a way the empirical information will speak for itself and it will be interpreted in the light of the established literature in order to be able to both support as well as to criticize this literature.