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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.
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