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

Author

Listed:
  • Stef Proost

    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

  • Kurt Van Dender

    (K.U.Leuven, C.E.S., Energy, Transport and Environment)

  • C. Courcelle

    (U.F.S.I.A., S.E.S.O.)

  • B. De Borger

    (U.F.S.I.A., S.E.S.O.)

  • J. Peirson

    (Canterbury, CERTE)

  • D. Sharp

    (Canterbury, CERTE)

  • R. Vickerman

    (Canterbury, CERTE)

  • E. Gibbons

    (Trinity College Dublin)

  • M. O'Mahony

    (Trinity College Dublin)

  • Q. Heaney

    (Trinity College Dublin)

  • J. Van den Bergh

    (Free University Amsterdam)

  • E. Verhoef

    (Free University Amsterdam)

Abstract

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.

Suggested Citation

  • Stef Proost & Kurt Van Dender & C. Courcelle & B. De Borger & J. Peirson & D. Sharp & R. Vickerman & E. Gibbons & M. O'Mahony & Q. Heaney & J. Van den Bergh & E. Verhoef, 2001. "How large is the gap between present and efficient transport prices in Europe?," Energy, Transport and Environment Working Papers Series ete0120, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    • Handle: RePEc:ete:etewps:ete0120
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    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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