A Modelling Approach
Transport Economics, Management and Policy series
Edited by Bruno De Borger and Stef Proost
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...