Efficient Pricing in Transport
The Gap between Theory and Practice
Many transport economists agree on the need for ‘efficient pricing’ in transport, as this would improve allocative efficiency and raise social welfare. Although the principle of efficient pricing is gaining ground in many countries, up to now it has been applied only rarely because of strong social resistance. But how can so many people be opposed to a principle which aims to increase social welfare? In this paper, I explore the major reasons underlying this paradox and examine the validity of arguments for and against efficient pricing. It appears that most arguments against efficient pricing can be refuted easily. However, everything stands or falls on the basic assumption that efficient pricing will increase social welfare, the validity of which appears to be practically impossible to prove. The main cause of this difficulty is the lack of complete information on the welfare effects of efficient pricing.
EJTIR is licensed under a Creative Commons Attribution 4.0 International (CC BY 4.0) licence. The license means that anyone is free to share (to copy, distribute, and transmit the work), to remix (to adapt the work) under the following conditions:
- The original authors must be given credit
- For any reuse or distribution, it must be made clear to others what the license terms of this work are
- Any of these conditions can be waived if the copyright holders give permission
- Nothing in this license impairs or restricts the author's moral rights