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Marginal Cost Pricing in Transport -
Integrated Conceptual and Applied Model Analysis

MC-ICAM is a research project funded by the European Union which examines policy reform in the pricing of transportation. In particular, it examines optimal implementation (or transition) paths from a situation with low pricing of transportation to a situation with socially optimal pricing, in which users bear the full marginal social cost of their activities. Paths which reach the same final goal can differ in the prices they set over time until the final prices are reached, in the uses of revenue, and in the speed with which they reach the final goal. MC-ICAM evaluates the different paths by examining how they affect social welfare over time, the technological and institutional changes which they generate or require, and the political support for marginal cost pricing which they induce over time. Some of the work consists of theoretical analysis. Other work examines selected geographic areas, providing both descriptive studies (of institutions, attitudes, etc.) and numerical estimates of optimal implementation policies. The project will thus produce policy recommendations about how to implement marginal cost pricing.

  Updated 05 November 2004