Reforming Transport Pricing in the European Union

Reforming Transport Pricing in the European Union

A Modelling Approach

Transport Economics, Management and Policy series

Edited by Bruno De Borger and Stef Proost

This timely book deals with the problem of pricing passenger and freight transportation within Europe. The contributors argue that current legislation affecting pricing and regulation is increasingly less successful in dealing with market failures and externalities such as congestion, air pollution, noise and accidents. Technological progress and greater European co-operation has brought increased scope for the reform of transport policies.

Introduction and a reader’s guide

Bruno De Borger and Stef Proost

Subjects: economics and finance, environmental economics, transport, environment, environmental economics, transport, urban and regional studies, transport


Bruno De Borger and Stef Proost Nearly everyone is confronted with traffic problems today. We all know what it is like to be stuck in a traffic jam, many people feel dissatisfied with public transport services or complain about excessive pollution generated by traffic. Moreover, almost each of us has a relative, friend or acquaintance who has been injured or even killed in a traffic accident. The problem is a complex one and there are conflicting interests at stake. Not surprisingly, every interest group has advanced its own remedy. The economic diagnosis of the transport problem is quite clear, however. Congestion, pollution and accident risks are typical examples of what economists call external costs. These costs are insufficiently captured in the prices paid for the different transport services, so that the users do not pay the full social cost of transport. In this sense, prices are ‘wrong’ from an economic viewpoint. The European Commission has, in its recent Green Paper on Fair and Efficient Pricing, underwritten this basic principle. Although the idea of marginal social cost pricing has been accepted in the economics profession for a long time, there have been very few attempts to study its implementation. This book is the result of a European research action that aims to fill part of the large gap between textbook prescriptions and real world policy.1 It was the first to study, on a European scale, the difference between current transport prices...