Assessing the Effectiveness of Marginal Cost Pricing in Transport - the Helsinki Case

Paavo Moilanen

No 223, Discussion Papers from VATT Institute for Economic Research

Abstract: A geographic MEPLAN model based on the principles of economic behaviour was applied to study the marginal cost pricing approach for optimising the use of the transport system in the Helsinki region. As the model can estimate land use relocation the analysis emphasises the long-term impacts. According to the model calculations, marginal cost pricing can increase the overall socio-economic efficiency of the transport system especially by reducing urban sprawl. The welfare gain obtainable can be estimated at 168 - 216 Euros per capita per annum compared with the business-as-usual scenario for year 2020 depending on the optimality of the pricing in the road network. This amounts to 6 to 11 % of the total expenditure on travelling. The real-world model test results of an urban area support the conclusions of the marginal cost pricing theory originally developed in conceptual models.

Keywords: Marginal cost pricing; modelling; land use and transport interaction; urban sprawl; external costs; congestion; Transport; Liikenne; Labor market and policies promoting economic growth; Työmarkkinat ja kasvua tukeva politiikka; R140 - Land Use Patterns; R400 - Transportation Systems: General (search for similar items in EconPapers)
Date: 2000
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