A Multi-Disciplinary Study of Pricing policies In Transport
Transport analysts - economists in particular - have often claimed that price policies should be one of the main pillars of transport policy-making. The idea would be that prices reflecting marginal costs would induce individuals to change their behaviour in a socially beneficial manner, and would thus lead to an efficiency improvement of the transport system.
Although transport pricing seems to have found its way into both Dutch and European policy documents (for instance the Dutch national traffic and transport plan NVVP, and the European Green Paper 'Towards fair and efficient pricing in transport'), the practical reality often appears quite different from the economic ideal in which - to put it oversimplified - optimal prices would always lead to optimal decisions, and an optimally efficient transport system would result without any further interventions.
In reality, there are a great number of blind spots in our knowledge and understanding of the optimal design and possible consequences of price policies in transport. This is partly due to the complex nature of transport markets, in which actors' decision making and behaviour not only involves a great number of dimensions (e.g. mode, route, time of day), but in addition are closely interacting with behaviour in many other markets (e.g. spatial behaviour in terms of locational choice of living, working, shopping and recreating; labour supply decisions; telecommunication, etc.). However, this is partly due also to the fact that different disciplines have traditionally studied the often challenging questions surrounding transport pricing in isolation, from a mono-disciplinary perspective.
These questions concern a number of general, far-reaching issues, such as:
- the behavioural responses to prices, a careful assessment of which would (at least) require joint inputs from the economic (efficiency of individual decision making under conditions of scarcity), geographical (spatial aspects, such as effects on accessibility and longer-run locational decisions), psychological (perception of prices and short-, medium- and long-run behavioural responses) and traffic engineering perspectives (static and dynamic transport network effects)
- the social and political acceptability of transport pricing, which involves (at least) a number of psychological and economic aspects surrounding the perceived fairness and perception of individual benefits and costs of transport pricing and tax revenue recycling schemes
Clearly, the above list is incomplete and indicative only, but serves to illustrate the main point underlying the current proposal, namely that the careful evaluation of pricing policies in transport not only gives ample scope for multidisciplinary research, but in fact even cannot do without it. The current proposal concerns such an approach. The central research question tying the efforts to be carried out in the context of this project together can most briefly be phrased as:
The project aims at providing a theoretical and empirical evaluation of the direct and indirect effects of practically possible transport pricing policies from a multidisciplinary perspective. The effects studied include behavioural responses and their consequences, also from a spatial and a network perspective, as well as acceptability issues of various pricing and tax recycling schemes. The evaluation includes the derivation and formulation of policy implications. Specific features of the project include the focus on dynamic aspects (both short and long run), the recognition of heterogeneity (i.e. the consideration of different groups), and the explicit choice for a network and spatial perspective.
The research will focus predominantly on road transport, although other modes are not excluded deliberately and indeed will be considered at some places. A wide variety of actors will be considered in the study, including consumers and suppliers of transport services, households and firms, governments, and other stakeholders.
The central research question can be subdivided into a number of more operational questions that will be studied in the project. Each specific question can in principle be studied from a variety of methodological viewpoints. The current project will make use both of conceptual theoretical analyses, modelling exercises using (possibly adapted) existing models, questionnaires and literature reviews. Whenever appropriate, a specific question will be studied from a multidisciplinary perspective.
MD-PIT is a research program that is directed by Dr. E.T. Verhoef (Vrije Universiteit Amsterdam). The five subprojects are conducted by separate research teams that consist of senior staff and PhD researchers of Delft University of Technology, University of Groningen, Vrije Universiteit Amsterdam and University of Utrecht.
NWO-Connekt contribution: EUR 750 000.
These are the so-called sub-studies:
Multi-disciplinary sub-study 1: Behavioural responses to transport prices (VU, RUG, TUD)
Multi-disciplinary sub-study 2: Transport network pricing, accessibility, siting perception and locational behaviour (VU, UU, RUG)
Multi-disciplinary sub-study 3: Transport pricing, revenue use, public perception and social acceptability (VU, RUG)
Multi-disciplinary sub-study 4: Pricing in dynamic transport networks (VU, TUD)
Multi-disciplinary sub-study 5: Transport pricing technologies, real-time information provision, and dynamic spatial and traffic network effects (UU, TUD)