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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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    References listed on IDEAS

    as
    1. Small, Kenneth A., 1983. "The incidence of congestion tolls on urban highways," Journal of Urban Economics, Elsevier, vol. 13(1), pages 90-111, January.
    2. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
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    5. 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.
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    Cited by:

    1. repec:eee:trapol:v:63:y:2018:i:c:p:98-107 is not listed on IDEAS
    2. Hennessy, Hugh & Tol, Richard S.J., 2011. "The impact of tax reform on new car purchases in Ireland," Energy Policy, Elsevier, vol. 39(11), pages 7059-7067.
    3. Amihai Glazer & Stef Proost, 2007. "The Preferences of Voters Over Road Tolls and Road Capacity," Working Papers 060712, University of California-Irvine, Department of Economics.
    4. de Rus, Gines & Campos, Javier, 2005. "Los fundamentos económicos de la política de transporte europea: un análisis crítico
      [The foundations of the European transport policy]
      ," MPRA Paper 12395, University Library of Munich, Germany.
    5. de Palma, André & Lindsey, Robin & Niskanen, Esko, 2006. "Policy insights from the urban road pricing case studies," Transport Policy, Elsevier, vol. 13(2), pages 149-161, March.
    6. Bigazzi, Alexander Y. & Figliozzi, Miguel A., 2013. "Marginal costs of freeway traffic congestion with on-road pollution exposure externality," Transportation Research Part A: Policy and Practice, Elsevier, vol. 57(C), pages 12-24.
    7. Proost, Stef & Van Dender, Kurt, 2004. "7. Marginal Social Cost Pricing For All Transport Modes And The Effects Of Modal Budget Constraints," Research in Transportation Economics, Elsevier, vol. 9(1), pages 159-177, January.
    8. Runhaar, Hens & van der Heijden, Rob, 2005. "Public policy intervention in freight transport costs: effects on printed media logistics in the Netherlands," Transport Policy, Elsevier, vol. 12(1), pages 35-46, January.
    9. Palma, André de & Lindsey, Robin & Proost, Stef, 2006. "Research challenges in modelling urban road pricing: An overview," Transport Policy, Elsevier, vol. 13(2), pages 97-105, March.
    10. Ho, H.W. & Wong, S.C. & Yang, Hai & Loo, Becky P.Y., 2005. "Cordon-based congestion pricing in a continuum traffic equilibrium system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(7-9), pages 813-834.
    11. Proost, Stef & Delhaye, Eef & Nijs, Wouter & Regemorter, Denise Van, 2009. "Will a radical transport pricing reform jeopardize the ambitious EU climate change objectives?," Energy Policy, Elsevier, vol. 37(10), pages 3863-3871, October.
    12. Delucchi, Mark A., 2007. "Do motor-vehicle users in the US pay their way?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(10), pages 982-1003, December.
    13. Delucchi, Mark, 2007. "Do Motor-Vehicle Users in the US Pay Their Way?," Institute of Transportation Studies, Working Paper Series qt5841z3kx, Institute of Transportation Studies, UC Davis.
    14. Delucchi, Mark, 2007. "Do Motor-Vehicle Users in the US Pay Their Way?," Institute of Transportation Studies, Working Paper Series qt2884w7km, Institute of Transportation Studies, UC Davis.
    15. Inge Mayeres & Stef Proost, 2004. "Towards better transport pricing and taxation in Belgium," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(4), pages 23-43.
    16. Grazi, Fabio & van den Bergh, Jeroen C.J.M., 2008. "Spatial organization, transport, and climate change: Comparing instruments of spatial planning and policy," Ecological Economics, Elsevier, vol. 67(4), pages 630-639, November.
    17. Yossi Berechman & Bekir Bartin & Ozlem Yanmaz-Tuzel & Kaan Ozbay, 2011. "The Full Marginal Costs of Highway Travel: Methods and Empirical Estimation for North America," Chapters,in: A Handbook of Transport Economics, chapter 19 Edward Elgar Publishing.
    18. Cruijssen, F.C.A.M. & Salomon, M., 2004. "Empirical Study : Order Sharing Between Transportation Companies may Result in Cost Reductions Between 5 to 15 Percent," Discussion Paper 2004-80, Tilburg University, Center for Economic Research.
    19. Pérez-Martínez, P.J. & Vassallo-Magro, J.M., 2013. "Changes in the external costs of freight surface transport In Spain," Research in Transportation Economics, Elsevier, vol. 42(1), pages 61-76.
    20. Steininger, Karl W. & Friedl, Birgit & Gebetsroither, Brigitte, 2007. "Sustainability impacts of car road pricing: A computable general equilibrium analysis for Austria," Ecological Economics, Elsevier, vol. 63(1), pages 59-69, June.
    21. Van Dender, Kurt, 2009. "Energy policy in transport and transport policy," Energy Policy, Elsevier, vol. 37(10), pages 3854-3862, October.
    22. Proost, Stef & Sen, Ahksaya, 2006. "Urban transport pricing reform with two levels of government: A case study of Brussels," Transport Policy, Elsevier, vol. 13(2), pages 127-139, March.
    23. Macharis, Cathy & De Witte, Astrid & Steenberghen, Therese & Van de Walle, Stefaan & Lannoy, Pierre & Polain, Celine, 2006. "Impact and effectivity of ‘Free’ Public Transport measures: lessons from the case study of Brussels," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 32, pages 26-48.

    More about this item

    Keywords

    transport pricing; external costs; social costs; congestion pricing;

    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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