Handbook of Research Methods and Applications in Transport Economics and Policy

Handbook of Research Methods and Applications in Transport Economics and Policy

Handbooks of Research Methods and Applications series

Edited by Chris Nash

Transport economics and policy analysis is a field which has seen major advances in methodology in recent decades, covering issues such as estimating cost functions, modelling of demand, dealing with externalities, examining industry ownership and structure, pricing and investment decisions and measuring economic impacts. This Handbook contains reviews of all these methods, with an emphasis on practical applications, commissioned from an international cast of experts in the field.

Chapter 12: Road pricing and investment

Bruno de Borger and Stef Proost

Subjects: economics and finance, transport, environment, research methods in the environment, transport, research methods, research methods in economics, research methods in the environment, urban and regional studies, research methods in urban and regional studies, transport


This chapter deals with pricing of the use of road infrastructure and with investment in additional road capacity. We have two clearly defined objectives. The first one is to discuss some important economic principles of transport pricing and investment, using the bottleneck model (Vickrey, 1969; Arnott et al., 1993) as our main pedagogic tool. The analysis that follows is therefore neither a survey of pricing and investment models that have appeared in the literature, nor a general comprehensive theory. We believe that a chapter in a handbook such as this one not only has to be more or less readable on its own; it also has to be digestible by a wide audience, including students and practitioners. Therefore, rather than to have an encompassing general theory, we present and implement a simple illustrative model that allows us to explain a series of relevant insights that are important in shaping pricing and investment policies. A second objective of this chapter is to review the results of implementing urban road tolls, using the few examples (such as London, Stockholm, etc.) where it has been successfully introduced. This also allows us to discuss problems of acceptability of road pricing policies.

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