J. Peirson et R. Vickerman, ENVIRONMENTAL-EFFECTS OF TRANSPORT - A MODEL OF OPTIMAL PRICING AND INVESTMENT FOR THE UK, International journal of environment and pollution, 7(3), 1997, pp. 343-356
This paper models the effects of imposing efficient pricing on interur
ban passenger travel in the United Kingdom and passenger travel in Lon
don. Both the internal and external costs of the main modes are estima
ted. The resulting efficient prices are used to predict the changes in
demand for each mode, together with implied tax revenues, operators'
aggregate surplus or deficit, and the implied investment needs. Effici
ent pricing and taxation of externalities does not lead to substantial
shifts to modes of transport with lower external costs and thus does
not substantially reduce the impact of transport on the environment. I
n the long run, demand changes are driven mainly by the growth of inco
me. The assumption made about the appropriate scale economies present
is an important determinant of the degree of change and overall effect
s. In the London model, sufficient revenue is generated to cover the d
eficits incurred by public transport operators.