This project is concerned with the assessment of the generalized costs of passenger transportation in New Jersey and the application of these cost estimates to policy decisions. The first objective was to develop a generic cost model that estimates the generalized economic costs of various modes of passenger transportation. The second objective was to use the model to analyze policy decisions concerning different modes of passenger transportation. It is important to use the concept of social marginal cost that incorporates users’ and external costs in measuring the cost of transporting people in a particular area. It is also important to develop a “dynamic” cost model that represents the relationship between the various cost categories for different modal mixes as they change over time.