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Assessing the Effectiveness of Marginal Cost Pricing in Transport - the Helsinki Case

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  • Paavo Moilanen
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    Abstract

    A geographic MEPLAN model based on the principles of economic behaviour was applied to study the marginal cost pricing approach for optimising the use of the transport system in the Helsinki region. As the model can estimate land use relocation the analysis emphasises the long-term impacts. According to the model calculations, marginal cost pricing can increase the overall socio-economic efficiency of the transport system especially by reducing urban sprawl. The welfare gain obtainable can be estimated at 168 - 216 Euros per capita per annum compared with the business-as-usual scenario for year 2020 depending on the optimality of the pricing in the road network. This amounts to 6 to 11 % of the total expenditure on travelling. The real-world model test results of an urban area support the conclusions of the marginal cost pricing theory originally developed in conceptual models.

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    Bibliographic Info

    Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 223.

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    Date of creation: 05 Jul 2000
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    Handle: RePEc:fer:dpaper:223

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    Related research

    Keywords: Marginal cost pricing; modelling; land use and transport interaction; urban sprawl; external costs; congestion;

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    1. Lasse Fridstrøm & Harald Minken & Paavo Moilanen & Simon Shepherd & Arild Vold, 2000. "Economic and Equity Effects of Marginal Cost Pricing in Transport," Research Reports 71, Government Institute for Economic Research Finland (VATT).
    2. David Milne & Esko Niskanen & Erik Verhoef, 2000. "Operationalisation of Marginal Cost Pricing within Urban Transport," Research Reports 63, Government Institute for Economic Research Finland (VATT).
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