IDEAS home Printed from
   My bibliography  Save this paper

Environmental Pricing in Transport


  • Edward Caltrhop
  • Stef Proost

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


Transport activity is inextricably linked with environmental damage. Economists traditionally urge policy makers to adopt pricing solutions, in particular taxes, to reduce environmental damage rather than quantity restrictions or standards. This chapter examines environmental pricing, defined broadly to include emission taxes, product taxes and subsidies and compares it to alternative approaches. We begin with a simple formal model to demonstrate the relative efficiency properties of pricing solutions, before highlighting some of the associated implementation problems. We then extend the scope and realism of the analysis by examining the choice between regulatory instruments in the presence of several market distortions. The basic case for environmental taxes, set at the correct level, is shown to remain. It is impossible to cover all modes and all real world case studies of pricing in this text. Rather, we illustrate our central point in the context of air pollution from car use. However, as we stress in the concluding section, the essential insight from the model applies to a whole range of enviromental problems in the transport sector. Readers interested in surveys of practical experiences are referred to The Policy Issues chapters of Handbook 6. A general introduction to the choice of regulatory instruments to tackle environmental damage can be found in Kolstad (1999).

Suggested Citation

  • Edward Caltrhop & Stef Proost, 2002. "Environmental Pricing in Transport," Energy, Transport and Environment Working Papers Series ete0208, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
  • Handle: RePEc:ete:etewps:ete0208

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Bruno De Borger & Stef Proost, 2015. "Tax and regulatory policies for European Transport – getting there, but in the slow lane," Working Papers of Department of Economics, Leuven 497597, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    2. Barbot, Cristina & Betancor, Ofelia & Socorro, M. Pilar & Viecens, M. Fernanda, 2014. "Trade-offs between environmental regulation and market competition: Airlines, emission trading systems and entry deterrence," Transport Policy, Elsevier, vol. 33(C), pages 65-72.

    More about this item


    Transport; environment; emission taxes;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ete:etewps:ete0208. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: library EBIB (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.