Modifying transport prices to internalise externalities: evidence from European case studies

Abstract This paper examines the implications of the valuation of air pollution and other externalities of transport infrastructure use in the context of the European Commission’s proposals for pricing based on marginal social costs. The aim is to examine the implications for transport prices, and hence transport demand and air pollution from the transport sector, by comparing existing variable taxes and charges with forecasts of marginal costs for different passenger and freight modes in 2010. The main finding is that economically efficient prices will only have a positive impact on transport emissions in a limited range of transport contexts.