Fair and efficient pricing in transport - Policy and research

'Towards Fair and Efficient Pricing in Transport' is the title of an EC Green Paper produced in 1995. Following its publication, the European Commission funded many research projects designed to clarify the principles and to explore what its implementation would mean in practice. This paper draws particularly on the results of two of these projects - Pricing European Transport Systems (PETS) and Concerted Action on Transport Pricing (CAPRI). It first outlines the conculsions on pricing principles, and considers some of the objections to them, before summarising the implications of their adoption. This paper argues that the most efficient approach to transport prices is to base prices on short run marginal social cost, less those elements of cost (eg time, fuel for private vehicles) supplied directly by the user.