FEEDBACK TUTORIAL LETTER

1st SEMESTER 2018

ASSIGNMENT 2

PRINCIPLES OF PTE511S

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FACULTY OF MANAGEMENT SCIENCE DEPARTMENT OF MARKETING AND LOGISTICS

SECTION: TRANSPORT & LOGISTICS Ms Hilma Kotti Tell: +264 - 2072711 E-mail: [email protected]

Feedback Tutorial letter Principles of Transport Economics (PTE511S)

Dear Distance students

Congratulations once again on completing Assignment 2 for this semester. You will soon learn that you will reap the fruits of your hard work and that it is important to manage your time successfully if you are studying via distance mode. The thoroughness with which you attempt these assignments will determine the amount of preparation you will have to do for the examination. It is therefore advisable to put in your best and ensure that you have understood the units outlined in the Study Guide on which the two assignments were based.

You are all serious with your studies and that is why despite the difficulty in studying through distance because you are working you are still making commendable attempts at improving your educational levels. This is no mean feat, it is quite remarkable and commendable and speaks volumes of your characters. I am aware that you have been working hard and sweating to ensure full completion of your two assignments.

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For those of you who has managed to score above 70% excellent. For those of you who has scored between 50% and 70% well done, but you still have to work a little harder to improve on your grades in the examination. It does not mean it is the end of the path for you if you have not achieve 50%, for those who qualified to go sit for the examination this is your time to embark upon all the areas or points that you missed in the assignments and make sure you understand them thoroughly. Regrettably for those who could not make it to the examination this must not be the end of the journey but a wakeup call for more hard work next year.

Questions specific comments

Please note that, marks were not only awarded for the correct answer only, but for the effort invested by researching widely on the specific topic under discussion and a well presented answer.

Majority of the students lost marks because of plagiarism. Such students simply copied and pasted contents from internet sources and presented them as their own idea, without proper in-text referencing or acknowledge the author. Please consult the APA referencing guideline for future improvement.

Question 1

1.1 Discuss the impacts of negative arising from increased transport use? (10 marks)

This was a very straight forward question which should have been answered with greater accuracy than was. Students answered this question fairly; however, the majority have failed to read the question properly as a result they missed out the point of discussion. Some discussion covered all the negative externalities from transportation with little emphasise on negative externalities particularly from road transportation as per question. On the other hand, some students’ could not make a distinction between negative impacts of road transportation and negative externalities arise from road transportation. These may sounds the same however, the difference is, some negative impacts of road transportation may be beard by the person who is directly involved in the action (customers or transport operators) unlike for negative were the cost is borne by the third party.

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Your discussion should cover but not limited to the following:

 Road accidents  Air pollution  Noise pollution

1.2 Discuss whether taxation or changes in regulation would be more successful in solving the failures arising from negative externalities caused by increased road transport use? (15 marks)

This question was a challenge to majority of the students. However some students presented a good understanding of the effects of taxation and regulation in correction of market failure, but failed to relate it to the subject in question, As a result majority of you discussed the use of taxation or regulation to control the monopoly power not to exploit customer or either discussed on the use of regulation to control market failure caused by unequal distribution of wealth in the country (inequality). Well the information good and true but not necessary for this specific question.

Note: market failure can arise for many reasons, which include: the abuse of monopoly power, inequality, positive externality, negative externality and many more. However, this question was very specific. You were required to discuss whether the use of taxation or change in regulation would provide a solution to market failure arising from negative externality caused by road transport use?

Your discussion should cover but not limited to the following:

 The use of pollution taxes to control air pollution  Increase in fuel levy to discourage the use of private cars and encourage public transportation  Impose high vehicle excise duties on imported cars  Strict regulation on the importation of vehicles e.g. Toyota corolla from Botswana  Increase in added tax (VAT) on vehicle in order to increase the cost of acquiring a vehicle

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 Restricting certain type of vehicles from entering the central Business district(CBD) to reduce congestion  Implementing Toll routes etc.

Question 2

2.1 Analyse how barriers to entry determine the degree of in transport markets? (10 marks)

This was a very straight forward question but was also a challenge to majority of the students. This question required full understating of barrier to entry as one of the determinants of different market structures that exist in the economy, and how this determine the level of competition in the market. Students presented a good understanding of barriers to entry but failed to discuss how these decide the degree of competition in the market. Some students outlined different barriers to entry but did not explain how each of those determines the level of competition.

Your discussion should cover but not limited to:

• Depends on the approach used, for instance if your discussion is about different barriers to entry, then you should point out how these barriers trigger competition in the market. If you discuss about freedom of entry for each market structure, then you should also explain how barriers to entry trigger competition in those markets.

E.g. in a monopoly and market structure, the barriers to entry are very high due to either high cost of capital or regulation by the government hence there tend to be no competition at all due to the fact that, there’s only one provider of a good or without close substitute or there are only few players in the market in the case of oligopoly.

Question 3

3.1 Explain the economic principles that underpin ? (10 marks) This question required full understating of road pricing as it appears in your study guide unit 6. The question was answered fairly however some students interpreted road pricing wrongly as the price that you charge the customer. Hence their discussion

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ended up on how to set this price. This shows that some students do not even read the course material given to them and do more research but they just answered from their personal point of view.

Road pricing (also road user charges) refers to direct charges levied for the use of , including road tolls, distance or time based fees, congestion charges and charges designed to discourage use of certain classes of vehicle, fuel sources or more polluting vehicles. The question hence required you to discuss the economic reason for road pricing.

3.2 Briefly discuss whether giving increased subsidies to firms providing bus services in Windhoek would correct market failure arising from congestion in the city?

(10 marks)

Subsidy means a payment form a government to a person or company.

Many subsidies are indeed provided in that form, as grants or, more generically, direct payments

Given that public transport generates external benefits, there is a strong case for subsidizing non-private means of transport, such as bus, coach, tram and rail transport. The effect of subsidy on public transport is to reduce the costs of supply to the provider. Governments, of any variety, may opt to subsidise

Key motivations of transport subsidies are the need to provide transport to people who cannot afford it or are who physically or legally incapable of using an automobile, to reduce congestion, land use and emission of local air pollution and greenhouse gasses. Other motives may be related to promote business and , or urban renewal in formerly deprived areas of the city.

Students answered this question fairly. Unit 6 in your study guide will give you more clear understanding on transport subsidies.

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Furthermore, I urge you to read through the first Tutorial Letter, the instructions on page 8 need to be adhered to without any excuse. You also need to thoroughly go through the Study Guide and research widely about the specific aspects of the assignment. Despite having said that you have to give references at the end of the assignment using APA referencing style, many of us still do not bother to do so.

In conclusion, please be encouraged to work hard, the effort you put to your work will be rewarded and as you are approaching the examination, try to prepare in advance and aim to score high. You can do it if you determinedly put pressure and research a lot.

Please feel free to contact me should you have further questions or concerns

Wishing you all the best for your Examination!!!!!!

Best regards

Ms Hilma Kotti-Nuuyandja

Marker-Tutor (Principles of Transport Economics)

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