Reforming transport pricing: an economist's perspective on equity, efficiency and acceptability

Inge Mayeres and Stef Proost

No 544189, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: This paper applies the traditional definition of equity and efficiency in economics to transport pricing. It is shown how this framework can also be used to define acceptability. The problems and potential of this approach are illustrated by examining the effects for Belgium of replacing current transport pricing by marginal social cost pricing. The welfare effects on different income groups of this pricing reform are shown for different income groups using a computable general equilibrium model. We demonstrate how the efficiency, equity and acceptability of the reform depend not only on the change in transport prices but also on the way the extra tax revenues are used. We compare the effects of the use of net tax revenues for higher social transfers and for lower labour taxes.

Date: 2002
Note: paper number ETE WP 2002-12
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Published in Working Papers, pages 1-16

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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:544189

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