The implementation of marginal external cost pricing in road transport*

The implementation of marginal external cost pricing in road transport

This article discusses a number of issues that will become increasingly important now that the concept of marginal external cost pricing becomes more likely to be implemented as a policy strategy in transport in reality. The first part of the article deals with the long-run efficiency of marginal external cost pricing. It is shown that such prices not only optimize short-run mobility, given the...

Marginal cost pricing versus insurance

The regulator of a natural monopoly that sets a two-part tariff and whose marginal cost is stochastic will generally want the price to vary less than marginal cost when the lump-sum charge in the tariff is fixed. A trade-off exists between efficient pricing and an optimal allocation of risk. Pricing at marginal cost is only optimal when the consumer’s marginal utility is independent of the pric...

Noise Charges in Road Traffic: A Pricing Schedule Based on the Marginal Cost Principle ?

One way of mitigating the negative effects of noise from road traffic is to include the external cost of noise in a road charging system. This study shows how standardized calculation methods for road traffic noise can be used together with monetary estimates of the social cost of noise exposure to calculate charges based on the social marginal cost. Using Swedish data on traffic volume and ind...

Optimal public transport pricing: Flat pricing vs. user-specific marginal social cost charging

Implementation of Marginal Cost Pricing in Transport – Integrated Conceptual and Applied Model Analysis Final Report for Publication