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Reforming Transport Pricing in the European Union

A Modelling Approach

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.
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Chapter 17: How large is the gap between present and efficient transport prices in Europe?

Stef Proost, Kurt Van Dender, Christoph Courcelle, John Peirson and Duncan Sharp


17. How large is the gap between present and efficient transport prices in Europe? Stef Proost, Kurt Van Dender, Christoph Courcelle, Bruno De Borger, John Peirson, Duncan Sharp, Roger Vickerman, Edna Gibbons, Margaret O’Mahony, Quinten Heaney, Jeroen C.J.M. van den Bergh and Erik T. Verhoef 17.1 INTRODUCTION The present policy mix in European transport markets contains measures ranging from traffic safety and environmental performance regulation of vehicles to public transport subsidies, excises on fuel and taxes on the ownership and use of vehicles. The recent Green Paper of the European Commission on Fair and Efficient Pricing concluded that this mix of instruments yields unsatisfactory results, including excessive congestion, an excessive accident rate and excessive pollution. The Green Paper pleaded for a more fundamental role of pricing policies to control the negative side effects of transport activities. In this concluding chapter we analyse the gap between present transport prices and efficient transport prices with the help of the six case-studies that were discussed in the other chapters of this volume. The process of determining efficient prices involves two consecutive steps. First, one has to find out to what extent current prices deviate from the corresponding social marginal costs. This requires the computation of resource costs, external costs and current taxes on all transport markets. The second step is to compute what is the most appropriate correction of transport taxes. The case studies focus on the pricing of both urban and interurban transport. Long-range international transport...

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