Operationalisation of Marginal Cost Pricing within Urban Transport
AbstractCharges and taxes for transport have traditionally had little connection to costs, instead being part of broader fiscal policies of raising revenue or directly promoting other goals, industrial, social and environmental. The gap between the costs and actual charges is particularly evident in urban road transport where current pricing mechanisms typically make little or no attempt to reflect concentrations of transport activity in time and space and hence of transport induced costs. Economic theory shows that, under the market approach, marginal cost pricing is a condition for economic efficiency. Still, a huge gap exists between the lessons of economic theory and the possibilities of current technology on one hand, and the achievements in implementing marginal cost pricing thus far in practice on the other. In relation to the broader socio-economic context of marginal social cost pricing, determined by various technological, institutional, legal and political constraints, this report highlights three important aspects or distinctions: the distinction between policy situations with different coverage, the distinction between first-best and second-best situations, and the need for policy packaging.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Government Institute for Economic Research Finland (VATT) in its series Research Reports with number 63.
Date of creation: 31 Dec 2000
Date of revision:
Find related papers by JEL classification:
- C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- de Palma, André & Lindsey, Robin & Niskanen, Esko, 2006.
"Policy insights from the urban road pricing case studies,"
Elsevier, vol. 13(2), pages 149-161, March.
- DE PALMA, André & LINDSEY, Robin & NISKANEN, Esko, . "Policy insights from the urban road pricing case sudies," CORE Discussion Papers RP, UniversitÃ© catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1881, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Paavo Moilanen, 2000. "Assessing the Effectiveness of Marginal Cost Pricing in Transport - the Helsinki Case," Discussion Papers, Government Institute for Economic Research Finland (VATT) 223, Government Institute for Economic Research Finland (VATT).
- Simon Shepherd, 2003. "Towards marginal cost pricing: A comparison of alternative pricing systems," Transportation, Springer, Springer, vol. 30(4), pages 411-433, November.
- Simon Shepherd, 2008. "The effect of complex models of externalities on estimated optimal tolls," Transportation, Springer, Springer, vol. 35(4), pages 559-577, July.
- Vold, Arild, 2006. "Phased implementation of transport pricing for Greater Oslo," Transport Policy, Elsevier, vol. 13(2), pages 140-148, March.
- David Milne & Esko Niskanen & Erik Verhoef, 2001. "Legal and Institutional Framework for Marginal Cost Pricing in Urban Transport in Europe," Research Reports, Government Institute for Economic Research Finland (VATT) 76, Government Institute for Economic Research Finland (VATT).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anita Niskanen).
If references are entirely missing, you can add them using this form.