6: Reforming Transport Pricing: An Economic Perspective on Equity, Efficiency and Acceptability

Any major pricing or taxation reform will be accepted only if it shows a welfare gain or no welfare loss for a sufficiently large majority of the voters. This is the essence of the economic approach to acceptability. A necessary condition for an individual voter to accept the reform is that his utility is not reduced. For some types of reform, the utility impacts on voters will be unequally distributed which makes the reform more difficult to accept. This is a well-known problem in the reform of industrial and trade policy.

In this paper we focus on transport pricing reforms. We deal with reforms that bring us from the present pricing policies – that are not very well focussed – to marginal social cost pricing which increases economic efficiency by addressing the different sources of external costs more directly. This is a policy priority for the European Commission.