ROAD TRANSPORT EXTERNALITIES - INTERACTION BETWEEN THEORY AND EMPIRICAL-RESEARCH

During the last decade much progress has been made in defining & measu ring the external costs of transport. As the cost of tolling equipment falls, the set of realistic policy options to internalise these exter nalities will continue to grow. This will determine the research and p olicy agenda. We make three points. Firstly, empirical work is still n ecessary to better identify marginal external costs, including congest ion, accident and environmental costs. Secondly, any assessment of pol icy options should treat externalities simultaneously. The use of pric ing instruments and emissions standards are discussed within this fram ework. Thirdly, we emphasise the role of government. Designing the opt imal road-pricing institutions requires consideration of horizontal an d vertical tax competition, while double-dividend arguments are centra l to the question of securing public support.