The inefficiency of marginal cost pricing on roads

Download
Sofia Grahn-Voorneveld

The economic principle of road pricing is that a road toll should equal the marginal cost imposed by an additional user, since this will lead to efficient use of the transport facility. However, when the road is used by traffic both from the road providing region as well as by traffic from another region, the supplied road standard is likely to be too low, since the consumer surplus of the users from outside the region is not taken into account. This can be solved by letting an authority level higher than the road supplier use taxes and earmarked transactions to raise the road standard. (In Europe we see this done in the Trans European Network). To do this the higher authority needs very detailed information about the road and the users on local level. Further raising taxes and transactions also involve costs that can be substantial. Another problem is that transactions of this type it is hard to separate from other political interference. This paper analyzes how a limited toll on top of the marginal cost can serve the purpose of solving this problem locally, without involving a higher authority.

MEET US


19-20
Oct

ERPUG 2017

The five year anniversary of  European Road Profile Users' Group (ERPUG) Forum will take place at Ramboll head quarter, Copenhagen, Denmark October 19-20, 2017. 

LATEST NEWS


2017-07-05

Vehicle Driver Monitoring: sleepiness and cognitive load

To prevent road crashes it is important to understand driver related contributing factors, which have been suggested to be the critical reason in 94 per cent of crashes. The overall aim of the project Vehicle Driver Monitoring has been to advance the...


2017-06-29

Tomas Svensson new director-general

Tomas Svensson was today appointed Director-General of VTI. Tomas has been acting Director-General since January 2017. 


2017-05-30

Crash testing bicycles at VTI

For the first time single bicycle crashes have been simulated at the VTI crash safety laboratory.


2017-05-15

A case study exploring firefighters’ and municipal officials’ preparedness for electrical vehicles

A VTI-study presents a social perspective on new vehicle technology. It explores the self-reported preparedness of the fire departments (i.e., rescue services) in Sweden’s three largest cities regarding rescue operations involving electrical vehicles (EVs).


2017-05-02

Pioneering research on and about bicycles at VTI

Under what circumstances might cyclists lose tyre grip? What actions could then be taken to prevent a crash? VTI is currently developing a theoretical model of the behaviour of bicycle tyres during braking and steering in different situations and on different...


2017-05-02

Virtual pedestrians create efficient stations

If more people are to choose sustainable travel, then the public transport stations of the future must be designed so that pedestrians can get where they are going quickly, without congestion or queues. The Swedish Road and Transport Research Institute (VTI)...