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How large is the gap between present and efficient transport prices in Europe?

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Author Info

  • Stef Proost

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

  • Kurt Van Dender

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

  • C. Courcelle

    (U.F.S.I.A., S.E.S.O.)

  • B. De Borger

    (U.F.S.I.A., S.E.S.O.)

  • J. Peirson

    (Canterbury, CERTE)

  • D. Sharp

    (Canterbury, CERTE)

  • R. Vickerman

    (Canterbury, CERTE)

  • E. Gibbons

    (Trinity College Dublin)

  • M. O'Mahony

    (Trinity College Dublin)

  • Q. Heaney

    (Trinity College Dublin)

  • J. Van den Bergh

    (Free University Amsterdam)

  • E. Verhoef

    (Free University Amsterdam)

Abstract

In this paper we analyse the gap between present transport prices and efficient transport prices. Efficient transport prices are those prices that maximise economic welfare, including external costs (congestion, air pollution, accidents). The methodology is applied to six urban and interregional case studies using one common optimal pricing model. The case studies cover passenger as well as freight transport and cover all modes. We find that prices need to be raised most for peak urban passenger car transport and to a lesser extent for interregional road transport. Optimal pricing results for public transport are more mixed. We show that current external costs on congested roads are a bad guide for optimal taxes and tolls: the optimal toll that takes into account the reaction of demand is often less than one third of the present marginal external cost.

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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0120.

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Length: 29 pages
Date of creation: Sep 2001
Date of revision:
Handle: RePEc:ete:etewps:ete0120

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Web page: http://www.econ.kuleuven.be/ew/academic/energmil
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Keywords: transport pricing; external costs; social costs; congestion pricing;

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References

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  1. Dickerson, Andrew & Peirson, John & Vickerman, Roger, 2000. "Road Accidents and Traffic Flows: An Econometric Investigation," Economica, London School of Economics and Political Science, vol. 67(265), pages 101-21, February.
  2. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
  3. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January.
  4. Glaister, Stephen & Lewis, Davis, 1978. "An integrated fares policy for transport in London," Journal of Public Economics, Elsevier, vol. 9(3), pages 341-355, June.
  5. Proost, Stef & Van Dender, Kurt, 2001. "The welfare impacts of alternative policies to address atmospheric pollution in urban road transport," Regional Science and Urban Economics, Elsevier, vol. 31(4), pages 383-411, July.
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Cited by:
  1. de Palma, André & Lindsey, Robin & Niskanen, Esko, 2006. "Policy insights from the urban road pricing case studies," Transport Policy, Elsevier, vol. 13(2), pages 149-161, March.
  2. de Rus, Gines & Campos, Javier, 2005. "Los fundamentos económicos de la política de transporte europea: un análisis crítico
    [The foundations of the European transport policy]
    ," MPRA Paper 12395, University Library of Munich, Germany.
  3. Macharis, Cathy & De Witte, Astrid & Steenberghen, Therese & Van de Walle, Stefaan & Lannoy, Pierre & Polain, Celine, 2006. "Impact and effectivity of ‘Free’ Public Transport measures: lessons from the case study of Brussels," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 32, pages 26-48.
  4. Proost, Stef & Van Dender, Kurt, 2004. "7. Marginal Social Cost Pricing For All Transport Modes And The Effects Of Modal Budget Constraints," Research in Transportation Economics, Elsevier, vol. 9(1), pages 159-177, January.
  5. Steininger, Karl W. & Friedl, Birgit & Gebetsroither, Brigitte, 2007. "Sustainability impacts of car road pricing: A computable general equilibrium analysis for Austria," Ecological Economics, Elsevier, vol. 63(1), pages 59-69, June.
  6. Grazi, Fabio & van den Bergh, Jeroen C.J.M., 2008. "Spatial organization, transport, and climate change: Comparing instruments of spatial planning and policy," Ecological Economics, Elsevier, vol. 67(4), pages 630-639, November.
  7. Proost, Stef & Delhaye, Eef & Nijs, Wouter & Regemorter, Denise Van, 2009. "Will a radical transport pricing reform jeopardize the ambitious EU climate change objectives?," Energy Policy, Elsevier, vol. 37(10), pages 3863-3871, October.
  8. Cruijssen, F.C.A.M. & Salomon, M., 2004. "Empirical Study: Order Sharing Between Transportation Companies may Result in Cost Reductions Between 5 to 15 Percent," Discussion Paper 2004-80, Tilburg University, Center for Economic Research.
  9. Delucchi, Mark, 2007. "Do Motor-Vehicle Users in the US Pay Their Way?," Institute of Transportation Studies, Working Paper Series qt2884w7km, Institute of Transportation Studies, UC Davis.
  10. Bigazzi, Alexander Y. & Figliozzi, Miguel A., 2013. "Marginal costs of freeway traffic congestion with on-road pollution exposure externality," Transportation Research Part A: Policy and Practice, Elsevier, vol. 57(C), pages 12-24.
  11. Runhaar, Hens & van der Heijden, Rob, 2005. "Public policy intervention in freight transport costs: effects on printed media logistics in the Netherlands," Transport Policy, Elsevier, vol. 12(1), pages 35-46, January.
  12. Stef Proost & Inge Mayeres, 2005. "Towards better transport pricing and taxation in Belgium," Energy, Transport and Environment Working Papers Series ete0504, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  13. Hennessy, Hugh & Tol, Richard S.J., 2011. "The impact of tax reform on new car purchases in Ireland," Energy Policy, Elsevier, vol. 39(11), pages 7059-7067.
  14. Delucchi, Mark, 2007. "Do Motor-Vehicle Users in the US Pay Their Way?," Institute of Transportation Studies, Working Paper Series qt5841z3kx, Institute of Transportation Studies, UC Davis.
  15. Delucchi, Mark A., 2007. "Do motor-vehicle users in the US pay their way?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(10), pages 982-1003, December.
  16. Amihai Glazer & Stef Proost, 2007. "The Preferences of Voters Over Road Tolls and Road Capacity," Working Papers 060712, University of California-Irvine, Department of Economics.
  17. Van Dender, Kurt, 2009. "Energy policy in transport and transport policy," Energy Policy, Elsevier, vol. 37(10), pages 3854-3862, October.
  18. Pérez-Martínez, P.J. & Vassallo-Magro, J.M., 2013. "Changes in the external costs of freight surface transport In Spain," Research in Transportation Economics, Elsevier, vol. 42(1), pages 61-76.
  19. Ho, H.W. & Wong, S.C. & Yang, Hai & Loo, Becky P.Y., 2005. "Cordon-based congestion pricing in a continuum traffic equilibrium system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(7-9), pages 813-834.
  20. Proost, Stef & Sen, Ahksaya, 2006. "Urban transport pricing reform with two levels of government: A case study of Brussels," Transport Policy, Elsevier, vol. 13(2), pages 127-139, March.

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