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.

Chapter 2: An overview of policy instruments

Bruno De Borger, John Peirson and Roger Vickerman

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

Extract

Bruno De Borger, John Peirson and Roger Vickerman 2.1 INTRODUCTION In the previous chapter it was argued that users of the transport system do not perceive the full marginal social cost of their travel decisions. This leads to traffic volumes in excess of what is socially desirable, and it implies a suboptimal distribution of transport flows over time and space. To tackle the various types of externality (congestion, noise, pollution, and so on) it was argued that a mix of price and non-price instruments would be required. In this chapter we briefly review the types of policy instruments which can be used to deal with the various externalities. Although many instruments are applicable to all modes of transport we place somewhat more emphasis on road transport, because several instruments are specifically designed to deal with road congestion. Moreover, the purpose of the overview in this chapter is not completeness, but rather to provide the necessary information on economic policy instruments that is required to understand the choice of policy packages considered further in this book. For more details on price and non-price instruments in the transport sector we refer to standard textbooks in transport economics (for example, Button, 1992) or to recent policy documents at the European level (for example, EU Green Paper, 1996). The structure of this chapter is the following. In Section 2.2 we consider various direct and indirect pricing instruments. Direct instruments charge the user for the transport service consumed, whereas indirect pricing measures...

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