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Marginal cost-pricing in the Swedish transport sector – An efficient and sustainable way of funding local and regional public transport in the future?

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  • Ljungberg, Anders

Abstract

Traffic results in negative external effects such as emissions, noise, congestion and infrastructural wear and tear. Public transport on the other hand, generates in many cases substantially larger positive system- and scale effects compared to its vehicle external marginal costs. This paper investigates actual external marginal costs of transport in Sweden for all modes of passenger transport in urban and rural areas and compare it to the level of positive system- and scale effects in local and regional public transport. The study is based on marginal costs of traffic in Sweden as reported in Transport Analysis yearly report to the government and on research on optimal public transport pricing. The numerical examples exemplify the situation in Sweden for a rural area (Jämtland County) and a larger urban area (Stockholm County). It is highlighted that taxes and fees in level with marginal costs can cover the existing financial deficit for public transport and an optimal subsidy in both the urban county and the rural county. However, among other things it is necessary to handle the legal aspects of such a funding of public transport before it could be used in the reality. Public transport are financed at county level, while the taxes and charges from traffic are an income on a national level.

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  • Ljungberg, Anders, 2016. "Marginal cost-pricing in the Swedish transport sector – An efficient and sustainable way of funding local and regional public transport in the future?," Research in Transportation Economics, Elsevier, vol. 59(C), pages 159-166.
    • Handle: RePEc:eee:retrec:v:59:y:2016:i:c:p:159-166
    DOI: 10.1016/j.retrec.2016.05.005
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    References listed on IDEAS

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    Cited by:

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    2. Nilsson , Jan-Eric Nilsson & Isacsson , Gunnar & Haraldsson, Mattias & Nerhagen, Lena & Odolinski, Kristofer & Swärdh, Jan-Erik & Vierth, Inge & Yarmukhamedov, Sherzod & Österström, Johannes, 2018. "The efficient use of infrastructure – is Sweden pricing traffic on its roads, railways, waters and airways at marginal costs?," Working papers in Transport Economics 2018:2, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    3. Swärdh, Jan-Erik & Genell, Anders, 2020. "Marginal costs of road noise: Estimation, differentiation and policy implications," Transport Policy, Elsevier, vol. 88(C), pages 24-32.

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    More about this item

    Keywords

    Marginal cost; External effects; Internalisation; Optimal public transport; Bus; Funding;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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