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The Consequences of Pricing Policies on Investment Decisions

In: Economic Evaluation of Transport Projects

Author

Listed:
  • Ginés de Rus

    (University of Las Palmas de Gran Canaria
    University Carlos III of Madrid
    FEDEA)

  • M. Pilar Socorro

    (University of Las Palmas de Gran Canaria)

  • Jorge Valido

    (University of Las Palmas de Gran Canaria)

  • Javier Campos

    (University of Las Palmas de Gran Canaria)

Abstract

Pricing and investment decisions are not independent. Pricing affects demand and, hence, social welfare. The social profitability of the project can be quite different depending on the pricing policy. Therefore, before deciding whether it is socially worthy to invest in a transport project, the team responsible for a project evaluation needs to know the charging scheme that will be applied. In this chapter, we show that when comparing different transport alternatives, a particular charging scheme may favour the creation of a particular transport infrastructure network, leading to irreversible long-term equilibria that would not be optimal under other charging schemes.

Suggested Citation

  • Ginés de Rus & M. Pilar Socorro & Jorge Valido & Javier Campos, 2023. "The Consequences of Pricing Policies on Investment Decisions," Springer Books, in: Economic Evaluation of Transport Projects, chapter 0, pages 67-82, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-35959-0_4
    DOI: 10.1007/978-3-031-35959-0_4
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