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The Benefit Cost Ratio

Authors: Harald Minken
Report nr: 1098/1998
Language: Norwegian

This note tries to resolve current controversies regarding the correct formulation and use of the benefit cost ratio. It is shown that the real difference between the formulations used by the National Road authority and the Rail Authority concerns the treatment of value added taxes. The theory of the benefit cost ratio is outlined, and apart from the VAT issue, current practice in the rail and road sector is found to conform to theory. There is no need of a revision of the standing 1979 Department of Finance guidelines on this issue.


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