How large is the gap between present and efficient transport prices in Europe?

Stef Proost, Kurt Van Dender, C Courcelle, Bruno De Borger, John Peirson, Roger Vickerman, E Gibbons, M O'Mahony, Q Heaney, Jeroen van den Bergh and Erik Verhoef

No 544226, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

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.

Keywords: transport pricing; external costs; social costs; congestion pricing (search for similar items in EconPapers)
Date: 2001
Note: paper number ETE WP 2001-20
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Published in Working Papers, pages 1-29

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Journal Article: How large is the gap between present and efficient transport prices in Europe? (2002)
Chapter: How large is the gap between present and efficient transport prices in Europe? (2001)
Working Paper: How large is the gap between present and efficient transport prices in Europe? (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:544226

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