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Optimal urban transport pricing with congestion and economies of density

Author

Listed:
  • Kurt Van Dender

    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

  • Stef Proost

    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

Abstract

The paper analyses the impact of economies of density on the characteristics of an urban transport system under optimal pricing conditions. Optimal pricing rules are derived for a transport system where bus and car modes are available for peak and offpeak trips. Both modes contribute to congestion. Each demand level for bus trips requires a minimal supply of bus-kilometres. Optimal bus supply exceeds this minimum only when waiting time reductions due to increased service frequency, outweigh congestion costs and bus supply costs (measured at the marginal cost of public funds). An empirical analysis for Brussels and London shows that taking account of economies of density modestly increases the welfare gain from optimising transport prices. Optimal public transport prices are lower when economies of density are taken into account, while optimal car prices are not strongly affected. In case car prices are fixed at the reference level, very low or zero public transport prices produce small welfare gains in some cases.

Suggested Citation

  • Kurt Van Dender & Stef Proost, 2001. "Optimal urban transport pricing with congestion and economies of density," Energy, Transport and Environment Working Papers Series ete0119, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    • Handle: RePEc:ete:etewps:ete0119
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    File URL: https://lirias.kuleuven.be/bitstream/123456789/544228/1/ETE-WP01-19.pdf
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    Cited by:

    1. Nelson, Peter & Baglino, Andrew & Harrington, Winston & Safirova, Elena & Lipman, Abram, 2007. "Transit in Washington, DC: Current benefits and optimal level of provision," Journal of Urban Economics, Elsevier, vol. 62(2), pages 231-251, September.

    More about this item

    Keywords

    transport; congestion; public transport;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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