Marginal Social Cost Pricing for all Transport modes and the effects of modal budget constraints

Stef Proost and Kurt Van Dender ()
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Kurt Van Dender: Department of Economics, University of California at Irvine

Energy, Transport and Environment Working Papers Series from KU Leuven, Department of Economics - Research Group Energy, Transport and Environment

Abstract: This paper studies the order of magnitude of the pricing corrections that are needed to implement marginal social cost pricing for all transport modes. With the TRENEN model we study this question for 6 areas in the EU. As marginal social cost pricing may generate important surpluses and deficits for the different modes, we also study the effects of two alternative pricing rules that satisfy budget constraints. We examine the effects of average cost pricing that guarantees a budget balance per mode. The second alternative pricing rule we study is social Ramsey pricing (or marginal social cost pricing with a budget constraint) where we impose a budget constraint at the level of the transport sector. We estimate transport effects and welfare effects of the three pricing rules. We show that average pricing rules may actually do worse than the present pricing rules and that social Ramsey pricing may achieve 50% or more of the maximal welfare gain.

Keywords: Transport pricing; optimal taxes; externalities; transport budget constraints (search for similar items in EconPapers)
JEL-codes: H23 H71 R41 R48 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2003-10
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: 7. MARGINAL SOCIAL COST PRICING FOR ALL TRANSPORT MODES AND THE EFFECTS OF MODAL BUDGET CONSTRAINTS (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:etewps:ete0311

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