THE ECONOMIC BENEFITS OF IMPROVED PRICING: AN ASSESSMENT OF THE GAINS FOR SPATIAL DISAGGREGATION AND THE USE OF A NOMINATED MASS SYSTEM

This paper addresses two very specific issues relating to the economic impact of revised user charges: 1) to what extent does the spatial averaging of road user charges - between jurisdictions, and between urban and rural areas - have a detrimental economic impact? and 2) how great are the economic benefits that would flow from refining the charging system through the use of charges based on nominated mass? The paper does not address the question of the administrative costs associated with the introduction and policing of more elaborate pricing systems, nor does it concern itself with the fiscal and equity issues relevant to the charging debate. It is solely concerned with the allocative efficiency losses due to imperfections in pricing. The conclusion, on all counts, is that greater refinement in pricing would bring little economic benefit. The introduction of a two-zone or state- by- state charges for heavy vehicles would be most unlikely to lead to economic benefits in excess of $1 million per year, and disaggregating prices by rural and urban areas even less. The potential gains from a nominated mass charging system are, on very generous assumptions, of the order of $2-$3 million: again, a deliberate and consistent bias towards under-estimating rather than over-estimating potential gains suggests that this figure should properly be regarded as an upper limit to likely gains.

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    NATIONAL ROAD TRANSPORT COMMISSION

    PO BOX 12387, ABECKETT STREET
    MELBOURNE, VICTORIA  Australia  3000
  • Publication Date: 1992-1

Language

  • English

Media Info

  • Features: References;
  • Serial:
    • WORKING PAPER
    • Issue Number: 2
    • Publisher: GOTHENBURG UNIVERSITY, DEPARTMENT OF ECONOMICS
    • ISSN: 1404-5362

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Filing Info

  • Accession Number: 00630295
  • Record Type: Publication
  • Source Agency: ARRB
  • Files: ITRD, ATRI
  • Created Date: Jun 21 1993 12:00AM