History of transport pricing

Transport pricing requires consideration of the specific characteristics of the demand and supply of transport. These specific characteristics fascinated some of the founders of modern economics as a discipline and have continued to provoke interest in successive generations of economists. It requires the definition of marginal costs; an analysis of the balance between economies of scale and scope and the risks of monopolistic exploitation; the need for regulation; and consideration of the external costs of transport. This chapter highlights some of the major themes that have run through the works of successive generations of economists as they have sought to reconcile the theoretical first-best solution with the practicalities of fixing prices that are both efficient and acceptable, not least in the context of the politics of transport policy. It provides a framework for understanding the historical and analytical developments which are covered in detail in subsequent chapters. Transport pricing requires consideration of the specific characteristics of the demand and supply of transport. These specific characteristics fascinated some of the founders of modern economics as a discipline and have continued to provoke interest in successive generations of economists. It requires the definition of marginal costs; an analysis of the balance between economies of scale and scope and the risks of monopolistic exploitation; the need for regulation; and consideration of the external costs of transport. This chapter highlights some of the major themes that have run through the works of successive generations of economists as they have sought to reconcile the theoretical first-best solution with the practicalities of fixing prices that are both efficient and acceptable, not least in the context of the politics of transport policy. It provides a framework for understanding the historical and analytical developments which are covered in detail in subsequent chapters.