Title: Marginal social cost pricing for all transport modes and the effects of modal budget constraints
Authors: Proost, Stef
Van Dender, K
Issue Date: 2003
Publisher: KU Leuven CES
Series Title: Working Papers vol: ETE WP 2003-11 pages:1-35
Abstract: This paper studies the order of magnitude of the pricing corrections that are needed to implement marginal social cost pricing for all transport modes. With the TRENEN model we study this question for 6 areas in the EU. As marginal social cost pricing may generate important surpluses and deficits for the different modes, we also study the effects of two alternative pricing rules that satisfy budget
constraints. We examine the effects of average cost pricing that guarantees a budget balance per mode.
The second alternative pricing rule we study is social Ramsey pricing (or marginal social cost pricing
with a budget constraint) where we impose a budget constraint at the level of the transport sector. We
estimate transport effects and welfare effects of the three pricing rules. We show that average pricing rules may actually do worse than the present pricing rules and that social Ramsey pricing may achieve 50% or more of the maximal welfare gain.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Research Center of Energy, Transport and Environment, Leuven

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