Jan Owen Jansson

User Costs and Benefits

Many transport economists have for some time proposed marginal social cost as the principle on which prices in the transport sector should be based and, in recent years, their prescription has come to be taken more and more seriously by policy-makers. However, in order to properly test the possible implications of implementing pricing based on marginal social cost and, ultimately, to introduce such a system, it is necessary to actually measure the marginal social costs concerned, and how they vary according to mode, time and context. This book reviews the transport pricing policy debate and reports on the significant advances made in measuring the marginal social costs of transport, particularly through UNITE and other European research projects. We look in turn at infrastructure, operating costs, user costs (both of congestion and of charges in frequency of scheduled transport services) accidents and environmental costs, and how these estimates have been used to examine the impact of marginal cost pricing in transport. We finish by examining how the results of case studies might be generalised to obtain estimates of marginal social costs for all circumstances and, finally, presenting our conclusions.

Pricing public transport services

This chapter aims at outlining pricing policy for public transport that maximizes the social surplus, that is, the sum of the producer surplus and the consumer surplus, while internalizing possible system-external costs. It starts by presenting the door-to-door transport cost as a key concept in price theory for public transport, and then first principles of optimal pricing valid for all modes of public transport are laid down. These principles are applied to urban (short-distance) public transport in sections 13.2–13.5 and to inter-urban (long-distance) public transport in section 13.6. Section 13.7 summarizes the methodological conclusions.