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

  • Proost, S.
  • Van Dender, K.
  • Courcelle, C.
  • De Borger, B.
  • Peirson, J.
  • Sharp, D.
  • Vickerman, R.
  • Gibbons, E.
  • O'Mahony, M.
  • Heaney, Q.
  • Van den Bergh, J.
  • Verhoef, E.

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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Article provided by Elsevier in its journal Transport Policy.

Volume (Year): 9 (2002)
Issue (Month): 1 (January)
Pages: 41-57

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Handle: RePEc:eee:trapol:v:9:y:2002:i:1:p:41-57
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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. 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.
  3. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
  4. 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.
  5. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January.
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