The Consequences of Pricing Policies on Investment Decisions

Ginés de Rus, M. Pilar Socorro, Jorge Valido () and Javier Campos
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Jorge Valido: University of Las Palmas de Gran Canaria

Chapter Chapter 4 in Economic Evaluation of Transport Projects, 2023, pp 67-82 from Springer

Abstract: 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.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-35959-0_4

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DOI: 10.1007/978-3-031-35959-0_4

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